Tips To Get The Best Tax Refund
It is that time of year again. Yes, tax time. This raises the ugly specter of having to sit down and do your taxes, but the joy of getting a refund. Let's look at some tips to get the best tax refund.
The first thing to understand is you should not want a large tax refund. Why? It means you've been paying too much money to the government during the year and have essentially given them a free loan for the 12 months in question. Once you figure out the refund amount, go back and adjust your paycheck or quarterly installments accordingly. Our government spends way too much money as it is. The last thing they need is a free loan!
The first tip to get the best tax refund is to do some research. You want to claim every single thing you legitimately can. Many people give away money on their refund because they are afraid of getting audited. The statistics are heavily in your favor. The audit rate for people making less than a couple hundred thousand dollars a year is roughly one percent. Of this group that does get audited, the vast majority of audits simply consist of a letter asking for documented proof. So long as you can send in receipts, you are fine. The face to face audits with agents still happen, but usually only if you make a lot of money.
The second tip is to check to see if you can claim any tax credits. Many people ignore tax credits because they may only be for $300 or so. This is a huge mistake. Why? Tax credits are deducted directly from the amount of the check you will be writing Uncle Sam. It is a dollar for dollar deduction, so a $300 tax credit is worth a lot more than $700 tax deduction that is simply used to lower your gross income.
Our next tip is one that might not help you this year, but you should print out and post above your computer. If you feel like you are paying too much, you probably are. The real way to get the best tax refund is to plan ahead. If you want to cut taxes down to manageable sizes, you need to take the steps early during the tax year. Trying to cut your taxes a couple weeks before April 15th isn't really going to do it. I highly advise you sit down with a CPA for an hour to find out about some simple steps that will save you a ton of money and slash your tax bill every year. It just makes sense.
That is it for the tips to get the best tax refund. If you are sick of overpaying Uncle Sam, plan ahead and you'll do much better.