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8 Simple Things That Can Help Maximize Your Tax Refund
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The way that medical science keeps extending life expectancy, before long the only thing certain in this world might be taxes, not "death and taxes." Be that as it may, the fact remains that taxes are not optional in the USA, and with the economic turmoil the chances are both the federal and state governments will be looking at your returns more closely than ever. It is more important than ever to get them right.
What you might forget is that it is to your benefit to get your state and federal returns right. "Right" doesn't mean paying more taxes, and it doesn't mean cheating to pay less, it means what the word says - paying the right amount. And the fact is, many Americans end up getting a smaller refund than they would if they had done their returns correctly. So the most important thing, of course, is being accurate and thorough. In no particular order, then, here are your "8 simple things that can help maximize your tax refund."
1. Use a shorter form if you qualify: Using the shortest form, the 1040EZ, is something you should do if you have no deductions, have no dependents, made a modest amount of money with no interest income, don't own a house, etc. If you want to take advantage of some of the most popular deductions and credits, you can use the longer 1040A, which is still less involved (meaning easier to do yourself) than the regular Form 1040.
2. Use Form 1040 to itemize: If you have a more complicated return, don't even think about a short form, or any other kind of shortcut. You will need to invest the time and effort to do your return correctly if you want to maximize a refund. For many this means using the 1040 and one or more accompanying Schedules.
3. Get all the Schedules you need: You can take some common deductions and credits on the 1040A, but when you itemize with the 1040 you will need to go beyond "single-page filing" and add appropriate Schedules. You will most certainly need to go this route if you have income from rentals, a business or farm, S-corporations, trusts or partnerships (with or without wages), or if you sold any property, mutual funds, stocks or bonds. Itemizing is the only way to claim adjustments to your income for tuition, fees and educator expenses, as well as moving expenses or health savings accounts. Get all the Schedules you need.
4. Study your status: There are reasons to file "married, joint return" just as there are reasons not to do so. Make sure you look at the difference that filing status can make on your return. There are any number of helpful articles online (start with the IRS site) that can help you figure out the best filing status for your unique situation. Don't believe the old stories, either, such as getting divorced every December 31st and remarried every January 1st. The fact is, there is plenty enough "schmooze room" left in tax preparation, especially with tax planning, to obviate the need for "tax divorce."
5. Save everything, track everything: This is something you should have been doing all year, of course. If you didn't do it last year, start now for next time around. Every single time you spend money on your business, home, education or other possibly deductible item, make note of the purchase and write down the date and particulars. Every time you drive to do business, write down the mileage in a notebook you keep in the car for that purpose (that's the rule). If you have to pay a babysitter while you go do some charitable work, that's deductible, too, so keep track of every penny.
6. Start early: Don't leave your tax preparation undone until April 14th or 15th. Get a head start on it by having everything ready and in order before you get your various tax-related forms from employers, banks, etc., in January. If you have your forms, Schedules, records, receipts and everything else organized and ready to go, you will have less stress during preparation, which will result in fewer errors and more money coming back. And the earlier you file, the sooner you will get your money back.
7. Consider the computer: Not only are there tax programs for personal computers, there are online services that let you file short forms for free (sometimes with strings, sometimes without). Check out these services if, in fact, you do not need to file an itemized return. Another advantage to using a computer program, on your PC or online, is the ease with which the return can be checked, for arithmetic as well as for all possible deductions. Finally, whether you complete the return by hand or online, there are some great online resources, including the IRS and state tax agency websites, which list hundreds of common deductions and scores of credits that people overlook. The computer is powerful, so use it however you can.
8. Check and recheck: Bottom line, you should never send in any return (or hit the "Submit" button online) if you are not 100% certain of its being both correct and complete. Every year the IRS releases the same basic press release, reminding people that most delays and return rejections are due to very basic errors in arithmetic, wrong Social Security numbers, bad addresses and incomplete wage statements or attachments. Be careful and double- or triple-check your work.
You may be smart enough to do all this, but still not have the time. If that is the case, you can easily see that investing some money in a good tax preparer is a good idea. You would not want to hurry through your return and risk missing important deductions and credits, so getting some professional help just might be the ticket for you. This is a decision you will have to work out for yourself. The fact is, though, that paying attention, being focused and resisting the urge to hurry (or procrastinate) are the most important "attitude adjustments" you can make.
Online IRS Extension.com has designed and developed Internet Tax Forms and Services that provide accuracy and convenience at an affordable price. For all your tax extension needs, visit us online today.
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