How to Maximize Your Tax RefundAdvertiser Disclosure by Lucy Lazarony
Looking for ways to maximize your tax refund come April 15? Check out these tips.
Build Your Retirement Savings
Contributing to a 401(k) plan offered by an employer is a nifty way to shield income from taxes and build up savings for the future. Making contributions to an individual retirement account works, too. With a traditional IRA or a 401 (k) plan, your contributions are made with pre-tax dollars, which helps to lower your taxable income for each tax year that you contribute to the plans.
Pay for Medical Expenses With a Flexible Spending Account
A flexible spending account allows you to set aside part of your salary on a pre-tax basis for medical expenses and for child and dependent care. Many employers offer FSAs and they can be a valuable tool for lowering your tax bill by shielding the money you pay for medical and child care expenses from taxes.
Deduct Medical Costs
Get a tax deduction for all the medical bills you’ve paid in the previous year. Medical expenses include health insurance premiums, dental care, eye care and glasses, mental health counseling and driving to and from doctor visits and other medical appointments. For the 2014 tax year, qualified medical expenses that exceed 10% of your adjusted gross income (AGI) can qualify for a deduction, unless you are age 65 or older, in which case the threshold is 75% of AGI.
Make Charitable Donations
Clean out the closets, donate an old car instead of trading it in at the dealership, make financial contributions to your favorite charities, all these things may be tax-deductible.
Giving to charities can help to trim your tax liability and boost the amount of any refund coming your way. Make sure you give your donations to a qualified charity and keep good records. You’ll need to itemize your charitable donations on a 1040 tax return using Schedule A.
Updated on January 22, 2015