According to Benjamin Franklin, nothing in this world is certain other than death and taxes. Needless to say, most Americans scramble during the tax filing season. They constantly search for ways and means in order to decrease their taxable income or at least increase their expected tax refund.
The following are several ways on how you can legally increase your tax income refund.
Tip 1: Keep a well-organized checks and balances system.
Keeping a well-organized checks and balances system is a great way for you to keep in check and monitor your cash flows. You need to establish a reliable recording system that lists all your various income and expense items.
People who maintain a well-organized checks and balances system can easily identify the amount of their taxable income and the tax income refunds they are entitled to.
Tip 2: Donate old, clutter-like nonperforming assets to charity.
One way of increasing your tax income refund is through charitable organizations. People will be surprised to know that they own a lot of clutter-like, nonperforming assets that are taxed by the Internal Revenue Service (IRS.)
For instance, donations to the 2010 Haitian Relief can result into tax refund based on the 2009 tax income filing.
Tip 3: Contribute the maximum allowable annual contributions to retirement plans.
Adjusting your personal gross income is another great way to increase your tax income refund. Hence, people who want to increase their tax income refund should adjust their gross income by contributing up to the maximum allowable retirement plan contributions.
Contributions to 401(K) and IRA can result into a hundred up to a thousand dollar tax income refund.
Tip 4: Look into certain items such as education expense, gambling losses and investment expenses.
There are certain expenses and losses items that can significantly increase a person’s tax income refund. These items include education expenses, interest paid on student loans, gambling losses, investment expenses and other legally deductible expense items.
Similarly, expenses incurred during job searching can also decrease a person’s taxable income – therefore, increasing his tax income refund.
Tip 5: The Making Work Pay Tax Credit (MWPC)
The Making Work Pay Tax Credit or simply the MWPC is a program which is part of the stimulus package by the Obama Administration. People who are eligible to a tax credit from the said program can receive as much as $400 for an unmarried individual and $800 for a married person.