With the tax deadline behind you, you have likely put taxes out of your mind. But it’s the perfect time to be proactive and start planning for the next tax season! If you want to maximize your tax refund next year, here are some things you can do now:
Adjust your W-4 withholding allowances
If you owed money at tax time, it is time to review your tax withholding from your paycheck and adjust your withholding allowances on your W-4. Adjusting the amounts on your W-4 form based upon your personal situation and latest paycheckwill potentially increase your income tax withholding. While your paycheck may be lower based upon the update, the payoff will come next spring when you don’t owe money when filing your taxes.
And as an added perk, you could potentially receive a tax refund instead. TurboTax W-4 withholding calculator can help you easily figure out how much you should have withheld on each paycheck to boost your tax refund. On the flip side, if you had a large refund but could use that money throughout the year instead, updating your W-4 form can help you increase your take home pay by reducing the amount that is being withheld with each paycheck. Simply follow the steps in the calculator, print out an updated copy of your W-4 form and submit it to your employer to have the changes take effect with your next paycheck.
Keep track of tax deductions
Organizing documents throughout the year helps ensure you don’t miss any deductions when it comes to tax season. Prepare a file and label it “Current Tax Info”, and tuck it into your desk drawer. Now, every time you see something during the year that’s tax deductible, drop it into the file. Knowing what tax deductions are allowed under the current tax law can help you plan and save at tax-time. TurboTax will help you claim the ones you’re eligible for with the questions asked when you prepare your tax return at tax-time. If you’re self-employed, you can track your income, expenses, mileage, and capture your receipts year-round with QuickBooks Self-Employed. That information can then easily export to your TurboTax Premium tax return.
Save for the future
It’s never too early or late to start investing in your retirement. If you haven’t started saving for the future, now is a good time. Here are a few tips to help towards the retirement goal:
a) You can contribute up to $23,000 in 2024 to your 401(k) retirement account. However, if you are age 50 or over you can make catch up contributions up to $7,500, which increases the total contribution to $30,500.
b) If you are self-employed, you can contribute to a Simplified Employee Pension (SEP) IRA up to: 25% of your net earnings up to a total of $69,000 for 2024 and your contributions can be deductible as a business expense. You can also contribute up to $76,000 ($78,000 if you are 50 and older) to your IRA and receive a tax deduction for your contribution.
c) Another reason to save is that you may automatically be eligible for the Savers Credit worth up to $1,000 ($2,000 married filing jointly). The Savers Credit is a little-known tax credit that lower to middle-income taxpayers can get just for contributing to their retirement and because it’s a tax credit, it will reduce the taxes you owe dollar-for-dollar.
Learn something new
Maybe you want to learn a new career, update your skills in your existing career, or study a subject you are interested to add to your overall knowledge No matter your motivation, if your income is moderate, you may be eligible for the Lifetime Learning Credit. You can claim a tax credit of 20% of your tuition expenses, up to $2,000 per tax return. You don’t need to be on track for a degree. The cost of any class taken at an eligibile educational institution taken at the college level is eligible for the tax credit.
Clean out your closets and donate to charity
In addition to creating new space in your life, you can take a quick tax deduction for the fair value (or thrift shop value) of household goods, gently used clothing and shoes, toys that your kids no longer play with, and even furniture you no longer need. If you have books and magazines you give to the library, you can deduct that as a charitable contribution as well. As long as you are able to itemize your deductions, you can use these donations to help reduce your taxable income. Make sure you obtain a receipt for any donations made.
Following these easy tips will help you get more money and boost your next tax refund!
Don’t worry about knowing these tax rules. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.
