Maybe your refund this year was less than expected, or maybe you want to lower your tax bill to $0. If so, here are 5 ways to maximize next year’s refund.
5. Start a Savings Account
If you don’t already have an IRA, create one! You can deduct a certain amount that you contribute to the account each year and prepare for retirement at the same time. If you’re wondering exactly how this will affect your return, contact us and we can help!
4. Donate to a Favorite Charity
If you are itemizing your tax return, it may benefit you tax wise if you donate to a charity. As long as the charity is a certified non-profit, you can deduct this amount on your tax return.
3. Switch to Solar Power
The Federal Solar Tax Credit allows you to deduct 30% of the cost of installing a solar energy system on your tax return. This is the last year that you can deduct the whole 30%, in 2020 it drops down to 26%, in 2021 it drops down to 22%, and from 2022 and onward it’s only 10%. So if you’ve been on the fence about becoming solar powered, now is the time!
2. Home Office Deduction
If you work from home and have a home office, you may qualify for the home office deduction. The percentage of your home that you use for your office can be deducted on your tax return. (For example, if your home office is 20% of your home, you can deduct 20% of the utilities and rent). So, make sure you keep track of these expenses throughout the year. If you have more questions, reach out to us and we can walk you through it.
1. Increase Your Withholdings
If you find that you have done all of these things but haven’t been able to get your tax balance down to $0, let alone obtain a refund, one of the best courses of action is to increase your withholdings throughout the year. This won’t affect the total amount you pay for the year, but it
will help spread your tax burden throughout the year rather than having to pull all the funds
together come tax season.