Tax season may only seem to span from January to April, but the reality is, you should really be planning for taxes all year round. Before you start panicking about W2s, 1009s, and more—relax. There are simple ways you can maximize your refund that have little to no number-crunching involved. Whether you’re happy with last year’s refund or need to make a change, follow these tips to keep your hard-earned dollars in your wallet when tax season rolls around.

Note: If you’re still waiting on your 2018 refund, check the stages of an IRS refund to ensure you’re on the right track to get your get your refund in the mail soon—an electronic return should process within 21 days of the filing date.

Check Your Filing Status

There are five filing statuses to choose from when you submit your yearly tax return:

  • Single
  • Married filing jointly
  • Married filing separately
  • Head of household
  • Qualifying widow(er) with dependent child

These filing options depend first on your circumstances. If you’re married, you will need to file under either of the “married” statuses—but they also depend on your personal preference, like if you choose to file jointly or separately with your spouse. You might find that changing your filing status may help you earn more money back on your next tax return—if you meet certain requirements, of course.

Filing separately might make sense for you if:

  1. You and your spouse have deductions based on your Adjusted Gross Income. Medical expenses for one spouse are a common instance.
  2. You or your spouse have income-based student loans that can be deducted on your tax returns.
  3. You need to protect yourself from liability issues in case one spouse suspects the other is involved in tax evasion or misfiling.

Optimize Your Credits and Deductions

One of the most effective ways to boost your tax refund is by claiming tax credits and deductions. Depending on the type you elect (and qualify for), you can either directly reduce the amount of taxes you owe, or lower your taxable income. Sold? Let’s discuss the specifics and talk about some examples of credits and deductions you may be able to claim on your next tax return.

Tax Credits

A tax credit is a dollar-for-dollar reduction in your tax dues. That means if you owe $1,000 in taxes but you qualify for a $1,000 tax credit, your tax balance becomes zero. Tax credits range from sustainable purchases to caring for your kids.

Here are some of the best money-saving tax credits:

Tax Deductions

Instead of lowering your tax bill altogether like tax credits, tax deductions reduce your taxable income. Your taxable income is the amount the government can tax you on—the higher that number is, the more taxes you’re likely to owe.

Here are a few tax deductions that are commonly overlooked:

Increase Your Tax Withholding

If you subscribe to a sort of “out of sight, out of mind” perspective, this tip is for you. While it may not guarantee you pay less in taxes, increasing your withholding amount can lessen the likelihood that you owe taxes at the end of the year. To increase the amount your employer withholds from your paycheck, you will need to file or re-file a W-4 with your employer. Zero is the highest amount you can ask your employer to withhold.

Takeaways

If you’re ready to cut down your tax bill, use these tips to help you prepare to save some cash on your next refund!

About the Author

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Michael launched Your Money Geek to make personal fun and accessible. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.

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