No one wants to owe Uncle Sam come tax season — and, if you’re the looking for the quickest way to ensure a refund, you might want to simply increase your withholding each month. (You can do that filling out a new W-4 form with your employer.) Still, even if you suspect you’ve kept your interest-free loan to the government slim over the course the year, there may be ways to boost your refund. If you’re looking for ways to maximize your tax refund come April 15, check out these tips.
1. Know Your Deductions & Your Exemptions
An exemption is money you earned but aren’t required to pay taxes on, while a deduction lowers your taxable income. Both can reduce the amount of money you owe Uncle Sam each year and/or help your score a bigger refund. That’s why it’s important to know which ones you are eligible for. We’ll cover a few common ones below, but you can find a longer guide to deductions and exemptions here.
2. Build Your Retirement Savings
Contributing to a 401K 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 401K 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.
3. Pay for Medical Expenses With a Flexible Spending Account
A flexible spending account (FSA) 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.
4. 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 2016 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 7.5% of AGI.
5. 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.
6. Consult a Professional
If your tax returns are getting increasingly complicated and you suspect you’re leaving money on the table, it may be time to get some help. There are plenty of professional tax preparers out there, including certified public accountants and tax attorneys. If you do decide to go pro, be sure to vet any tax preparer you are considering properly. The Internal Revenue Service has some tips for doing so on its website.
This article has been updated. It originally ran on January 23, 2014.