No matter what time of year it is, there are always things you can do to increase your tax return for the following year. Here are five things you can do right now to increase your 2016 tax return.
1. Add Up Those Deductions
It’s a well-known fact that many taxpayers don’t take advantage of all of their deductions, either because they don’t know about them or because they simply don’t think they’ll make enough of a difference. But you’d be surprised how quickly your deductions can add up once you start making a careful record of them.
Start making a trip log for things such as job interviews and off-site client meetings — and don’t forget to keep bus, subway, parking, toll and cab receipts as well. Be sure to document any qualifying job-related deductions (such as uniforms and home office equipment). Also, be aware of deductibles such as moving expenses (if they’re job-related), child day care (if it’s necessary so you can work), and charitable donations — you can even deduct the ingredients for those cookies you made for the school bake sale.
2. Increase Your IRA Deposits
You can reduce your taxable income by depositing the maximum amount you’re allowed to contribute to your IRA. And if you’re 50 or over, you can take advantage of the “catch-up” provision and add even more into your account.
3. Refinance Your Mortgage
Since the interest on your home mortgage is deductible, you can reap greater rewards on your tax return by refinancing your mortgage. After refinancing, the majority of your payment will be interest, which adds up to more deductible income.
4. Change Your Filing Status
This may not be feasible for everyone, but changing your filing status can decrease your taxes. In particular, married people who file jointly are able to claim twice the deduction of those who file separately.
5. Increase Withholding Exemptions
When you filled out your W-4 for your latest job, you were asked how many people you wanted to claim in your household. Basically, the more exemptions you claim, the less money is withheld in your taxes. If you want a bigger refund, ask your HR department to change your file to include fewer exemptions. It will mean that more taxes will be taken from your check every payday — but you’ll get more money back next year.
By going over your deductions, making a few financial changes and carefully considering your options, you can get a larger payout in your 2015 tax return, no matter how late in the year it is. Best of all, by making a few changes now, you’ll be on top of your game when it’s time to start thinking about next year’s taxes.