Tips for Getting the Biggest Tax Refund

Taxes are a fact of life, but you shouldn’t have to pay any more than necessary. Between the many different types of tax deductions and the confusing guidelines, it is easy to miss a few. By not taking advantage of all of the tax refunds and credits you are entitled, you are short changing yourself. Uncle Sam won’t point out those missed tax breaks, so it is up to you to figure out what tax deductions and credits you qualify for. Here are some tax deductions that you definitely want to take advantage of.

Choose the Right Filing Status

Generally, if you are married, you will get the biggest tax benefits if you select married filing jointly. Choose married filing singly, however, if you are separated so that you are not responsible for your ex-partner’s tax liability. You may also consider filing singly if one partner has some high medical bills and a low income in order to qualify for the medical tax deduction. Each year, calculate your taxes both ways to see which gets you the biggest tax refund.

You are probably aware that you can deduct charitable donations from your taxes, but you may not be deducting the full amount you are entitled to. If you donate cash, knowing the value is not a problem, but determining the value of non-cash donations is not as easy. The Salvation Army offers a guideline for determining the value of non-cash donations at http://www.salvationarmysouth.org/valueguide.htm. Instead of assigning a random value to that bag of donated clothing, make a list of the individual items and their estimated value. You may find that your donated goods are worth more than you thought they were. Make sure that you take into account the condition of your donated items and that you staple the list of items and their values to the receipt.

Not only can you deduct donations to Goodwill, you can also deduct both cash and non-cash contribution to your child’s school, the Boy Scouts of America, your church and other 501(3)c nonprofit organizations in your community. You can even deduct the travel costs to and from the organizations as long as long as you are traveling for the purpose of providing a voluntary service or donation.

Having children can get you a sizeable deduction on your taxes, but in some cases, you may be able to claim more than just your children. If you care or provide support for a child, you may be able to claim them as a dependent even if they are not yours. Some of the individuals you can claim as dependents are your children, grandchildren, step-children, brothers, sisters, cousins or one of their decendants. You may also be able to claim your college aged child if you provide more than half of their support, even if they aren’t living with you.

You may even be able to claim a qualifying adult as a dependent if they meet certain requirements, make less than $3650 during the year and you provide more than half of their support. In some cases, the individual need not even live with you. Make sure you do your research and understand the requirements completely before you claim someone other than your children as a dependent on your taxes to avoid getting into trouble with the IRS.

Your qualifying children can also get you additional tax cuts such as the child tax credit, earned income tax credit and the child and dependent care credit. The age limits and other criteria vary for each type of tax break, so be sure to check.

Your medical bills need to add up to more than 7.5% of your adjusted gross income in order to claim the medical tax deduction. This means that if your AGI is $30,000, your medical expenses need to be greater than $2250. This may seem like a lot, but if you plan ahead you may be able to take advantage of this deduction.

Not all medical expenses can be planned, but if possible arrange your expensive medical procedures to occur in the same year. For example, if you will be having a baby during the year, make an appointment for your husband’s lasik procedure and your child’s braces in the same year. You can deduct your insurance premiums as long as they are not paid with pretax dollars and medical supplies like prescription medicines, thermometers, contacts, saline solution, blood testing kits and band-aids. You can also deduct the cost of travel to and from a medical facility and the meals and lodging during your stay.

If you have changed jobs, you may be able to get a break on your taxes. Some of the expenses related to hunting for a new job, such as resume preparation, postage, travel and board for interviews and employment agency fees are tax deductible as long as you meet the following criteria. You must be looking for a job in a similar field and at a similar level as your previous job and expenses must not be reimbursed. You also must not be looking for your first job.

If your new job is more than 50 miles further away from your home than your previous job was, and you will be moving within the first year, many of the moving expenses are also tax deductible. You may be able to deduct the cost of moving your belongings, connecting and disconnecting utilities, travel, lodging and some storage costs as long as they were not reimbursed by your previous or new employer.

• You can deduct the interest on your mortgage or student loans.
  
• Some of the expenses for your vehicle are tax deductible if you drive it for business, charitable or medical reasons.
• Making your home more efficient by installing energy efficient appliances and upgrades can give you a break on your taxes.
• If your income is low to moderate and you make contributions to a retirement plan, you may be able to claim the savings tax credit.
• If you or one of your dependents is in college, you can benefit from several higher learning credits and deductions. Some of these are the tuition and fees tax deduction, the American Opportunity credit and the Lifetime Learning credit.
• You can claim the elderly or disabled credit if you are over 65 years of age or retired because you are permanently and completely disabled.
• You can deduct half of your self employment taxes if you are self employed.

There are several new or increased tax deductions for 2010 and 2011. Be sure to check out this video to make sure you aren't missing any of the deductions or credits you qualify for.