Tax season is upon us, and many Americans are looking forward to receiving their refund check. If you felt like you were shortchanged by Uncle Sam last year, here are five tips to help you maximize your return for 2016:
- Start early. The best time to start filing your tax return was yesterday. The second-best time is today. Procrastinating leads to pressure as Tax Day draws near, and it is more likely you will make a mistake. Starting early allows you to take your time and be as thorough as possible.
- Rethink your filing status. One of the first decisions you make when completing your tax return is your filing status. There are five statuses to choose from: single; married filing jointly; married filing separately; head of household; and qualifying widow(er) with a dependent child. 9 out of every 10 married couples file jointly, however, filing separately may yield a higher return depending on your circumstances.
- Itemize your deductions. The standard tax deduction is $6,300 for singles and $12,600 for married couples filing jointly. These standard deductions can help lower your taxes, but taking the time to gather your receipts and make an itemized list may lower your taxes even further.
- Claim credits. Credits are much more effective than deductions at reducing your tax bill and maximizing your refund. This is because credits are netted directly against the amount of money you owe, as opposed to merely reducing your taxable income. Available credits include the earned income tax credit, the child and dependent care credit, and education tax credits.
- Max out IRA contributions. This tried and true strategy allows you to reduce your taxable income while simultaneously building your nest egg. 401(k)s and Traditional IRAs both offer dollar-for-dollar income reduction and can even qualify you for the $1,000 saver’s credit.
Bonus Tip: Seek professional help. Having an experienced tax professional by your side will not only ease your stress, they can help you find deductions and credits that you were not aware of. Trust American Investment Planners, LLC to help you file your tax return this season.
To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.
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