8 Tips to Maximize Your Tax Refund
Tax season is here! The IRS just announced that Monday, 1/23/23, was the first day they would begin accepting and processing 2022 tax year returns. The deadline to file is 4/18/23, so save the date on your calendars! If you plan on making some big purchases with your refund, you might want to read on for some tips and tricks to help you get your biggest refund yet!
Here are 8 tips that will help you maximize your tax refund:
#1: Take advantage of an FSA account if your employer offers it
As part of Tomo’s benefits, we offer all of our employee’s the option to contribute to an FSA account. An FSA account, or Flexible Spending Account, allows you to put money in an account for eligible FSA expenses. When you need to use your FSA dollars, the money is deducted automatically from your paycheck before taxes are taken out. You can save on average 30% by using pre-tax dollars to pay for eligible FSA expenses.
#2: Donate to charity
According to the IRA, you may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. Generally, you may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.
#3: Claim credit for energy-efficient home improvements
This credit offers a maximum value of $1,200 per year from 2023 through 2032 and can go toward investments like qualified energy efficiency improvements made to domestic residences (i.e. improvements towards qualified exterior windows, doors and skylights, and building envelope components).
#4: Max out your IRA.
IRAs are a great way to save towards your retirement while reducing your taxable income. Make sure the IRA account is a traditional IRA and not Roth. Roth IRA accounts are not tax deductible now, but traditional IRAs offer tax deductibility in the present.
#5: Reconsider filing status if you are married
Filing status is important because it determines your credit eligibility, filing requirements and standard deductions. If you and your spouse have similar or identical incomes, a marriage penalty could affect your tax return. Consult a tax professional if you are unsure if you should file jointly or separately.
#6: Itemize deductions
According to IRS, you may benefit from itemizing if any of the following circumstances apply to you:
- You cannot use the standard deduction.
- You racked up pricy uninsured medical and dental expenses.
- You paid interest or taxes on your mortgage.
- Your employee business expenses were unreimbursed.
- You gave money to charities.
#7: Start your tax preparation now to avoid delays!
If your tax return is simple to prepare and you only have a w-2, it is better to get it done as soon as possible. The IRS processes over 100 million returns each year and can sometimes experience delays due to heavy incoming tax forms. Choosing a direct deposit method for your return may also be the best and quickest option.
#8: If you are a gig worker, count your work as income
If you are/were a delivery driver, Uber driver, or did any other work as an independent contractor, you must report your earnings and file your income on your tax return.
We hope that this information was helpful for you to get your biggest refund yet! For more financial tips and tricks, be sure to subscribe to our Medium page and also check out our website www.tomocredit.com.
