With some due diligence on your part, it won’t be difficult to get a bigger tax refund for 2019. One way you can do this is by having your employer withhold more of your paycheck each week. But while this may result in a larger refund, it definitely isn’t the best way to end up paying less overall. When your employer withholds more, the government holds onto your money all year long and only gives a portion of it back during tax time. Wouldn’t it be better to deposit these funds in a savings account instead of letting the government make use of it?
Fortunately, there are many other ways to boost the size of your tax refund for 2019. Read on if you want to maximize the money you get back at tax time.
Maximizing Your Deductions and Exemptions
Exemptions are any nontaxable income you earn. A deduction is anything that legally reduces your total taxable income. There are two types of deductions: itemized and standard deductions. You should definitely make use of one type of deduction or the other. The IRS recommends that you use itemized deductions if the total exceeds the standard deduction. For income you earned in 2019, the standard deduction is $12,000 for single filers, and $18,000 if you file as head of household. If you file jointly with your spouse, then it’s $24,000.
There are several changes that will impact your 2019 tax return. These changes are due to the Tax Cuts and Jobs Act (TCJA) that the federal government enacted in December 2018. For example, the 2018 personal exemption of $4,050 was eliminated for 2019.
Contributing to your employer’s 401(k) plan is another way to protect your income from taxation. Typically, you should factor these contributions in before you make any deductions. These contributions will reduce your taxable income because you’re not required to pay taxes on them. An Individual Retirement Account (IRA) is another way to lower your taxable income. Although you’re not allowed to use pretax money for a traditional IRA, you can still deduct contributions you make to them from your taxable earnings.
The IRS has increased the limit that an employee can make to certain retirement accounts. These include things like 457, 403(b), 401(k) retirement plans, and the Thrift Savings plans offered by the government for 2019. The new limits are $18,500 for individuals under the age of 50 and $24,500 for those over 50. The contributions must be made before April 15, 2020.
Pay Any Medical Expenses with a Flexible Spending Account (FSA)
You’re allowed to set aside part of your salary on a pretax basis for medical expenses and childcare with a Flexible Spending Account (FSA). Many employers provide FSAs, and they can be a great help in reducing your total taxable income.
Deduct Your Medical and Dental Expenses
Taxpayers who itemize their deductions can deduct the costs of any medical bills they pay during 2018. This includes payments for dental care, mental health counseling, eye care, and any driving expenses you incur from doctor visits. Qualified medical bills that exceed 7.5 % of your 2018 adjusted gross income can be used as deductions.
Giving to Receive: Charitable Donations and Your Tax Refund for 2019
Cash gifts and other types of charitable donations are actions that qualify as tax deductions. The same holds true if you donate an old vehicle, provided you don’t trade it in or receive anything of value in return. But remember– charitable donations only qualify if you choose to itemize your deductions in the first place.
Also, make sure you donate only to qualified charities and maintain records to claim the deductions properly. Lastly, you should always use Schedule A on your 1040 form to itemize your charitable donations.
Hire a Reputable Tax Consultant
If your tax situation is particularly complex, you might need professional help to avoid losing money. There are many types of tax professionals who can give you this necessary assistance, although most people opt for a Certified Public Accountant or an experienced tax attorney.
These experts can help you navigate relevant tax laws in a way that results in a larger return. Just be sure to vet these professionals before settling on which one to use. If you need help in this regard, the IRS has a number of tips on finding the right person for the job.
How You Can Get a Larger Refund More Quickly
Tax refunds are usually processed in about three weeks. If you can’t wait three weeks to receive your refund and plan to hire a tax consultant, you can apply for something called a refund advance loan. This type of loan will get you your refund much faster than simply waiting for the government to process it.
Some tax preparation professionals provide interest-free loans if you pay for their services. With a refund advance loan, you can sometimes receive your money (or some portion of it) as early as the very next day. This is a big reason you should consider using tax preparation services to expedite the entire process.
Using a tax consultant isn’t the only way to go about filing your taxes. You can also use a tax attorney, a free tax filing service like efile.com, TurboTax, and the Free File Forms that are offered by the IRS. The majority of taxpayers are eligible for free tax preparation, so be sure to research your options thoroughly before making a final decision.
It’s never a good idea to procrastinate when it comes to filing your taxes. Unpaid taxes can lower your credit score and do a great deal of damage to your financial situation. File your taxes as soon as possible to avoid unnecessary fines. These fines are a waste of your hard-earned money. This is where a professional tax service can come in handy. But not all these firms are created equal, so make sure to do your research before deciding on which tax service to use this year.
By following these directions, you’re certain to maximize your tax refund for 2019. These tax tips will also make sure you file your taxes correctly. You don’t need any extra worry during tax time, so do yourself a favor and follow these instructions precisely.
About Jason Knott
Jason is an experienced CPA and tax attorney. His practice focuses on advising individuals and global organizations on tax issues related to domestic reporting and compliance, and international tax issues involving tax treaties, transfer pricing, and cross-border investments and business operations. He frequently represents individuals and businesses faced with IRS notices and audits, and can assist with negotiating tax liens, installment agreements, offers in compromise and penalty abatement requests.