Get Ahead: Smart Tips to Maximize Your Tax Refund for Next Year
Tax season may be in the rearview mirror, but that doesn’t mean you should forget about taxes altogether. Now is an excellent moment to plan ahead to ensure you get the most out of your refund next year. Here are some actionable strategies to help you do just that:
Revisit and Adjust Your W-4 Withholding Allowances
Did you end up owing money this past tax season? It might be time to re-evaluate the amount being withheld from your paycheck. By recalibrating your W-4 form allowances, you can potentially increase your income tax withholding, which might mean a smaller paycheck now but a smaller tax billβor even a refundβnext spring. Tools like the TurboTax W-4 withholding calculator can simplify this process for you.
Conversely, if you received a substantial refund but would rather have that money available throughout the year, updating your W-4 can also increase your take-home pay. Just follow the instructions on the calculator, print the revised form, and submit it to your employer.
Keep a Keen Eye on Tax Deductions
Being organized throughout the year can make a significant difference when tax season rolls around. Create a folder labeled "Current Tax Info" and place it in a convenient location. Anytime you come across a tax-deductible item, toss it into this folder. This will help ensure you don’t miss any deductions. For self-employed individuals, tools like QuickBooks Self-Employed can help keep track of income, expenses, mileage, and more, which can then be seamlessly imported into your TurboTax Premium return.
Secure Your Future: Retirement Contributions
Starting or ramping up your retirement savings can have dual benefits: securing your financial future and reducing your tax bill. Here are a few tips:
- 401(k) Contributions: For 2024, you can contribute up to $23,000 to your 401(k). If you’re 50 or older, you can make additional catch-up contributions, raising the limit to $30,500.
- SEP IRA for the Self-Employed: Contributions can be as much as 25% of your net earnings, capped at $69,000 for 2024. These contributions can also serve as a business expense deduction.
- Savers Credit: If you’re a middle or lower-income taxpayer, you may qualify for a relatively unknown tax credit just for contributing to your retirement. This credit can reduce your tax bill by up to $1,000 ($2,000 for married couples filing jointly).
Enhance Your Skills and Get Tax Credits for It
If youβre considering taking classes to learn a new skill or advance your existing career, the Lifetime Learning Credit might be available to you. This credit allows you to claim 20% of your tuition expenses, up to $2,000 per tax return. You donβt need to be pursuing a degree to qualifyβthe cost of any eligible course at a post-secondary institution can count.
Declutter and Donate
Cleaning out your closet can be both a liberating and financially rewarding exercise. Donating gently used itemsβsuch as clothing, toys, and furnitureβcan qualify for a tax deduction equivalent to their fair market value. Books and magazines given to libraries can also be deducted. Remember to get a receipt for any donations and itemize your deductions to enjoy these benefits.
By following these simple yet effective tips, you can maximize your tax refund for next year, putting more money back into your pocket.
Donβt stress about mastering all these tax rules. With TurboTax, you can either manage your taxes on your own or enlist the help of a TurboTax expert. Either way, youβll be guided to ensure you get every dollar you deserve and your largest possible refundβguaranteed.
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