Tax Refund Check

Get More Back on your Tax Refund Check

                                                                                   

Often times people miss out on deductions due to them by improperly trained tax preparers or software that does not "ask the right questions". This article was written to let you become more knowledgeable and prepared when getting your taxes prepared or even help you get money back from returns you already filed.

Print this article out and take it with you next year when you go to get your taxes prepared. If your preparer does not ask you these questions then ask them to see if it applies or more advantageous for your situation.! This information is used a to brief you on some possible deductions so you may ask your preparer more about the deductions and is certainly not the tax law in it's entirety.

 

1. Filing Status: Often the least advantageous filing status is selected on your return. Make sure your preparer checks which is better for your situation.

• Often times Married Filing Jointly is selected when Married Filing Separately may or may not be the better choice.

• Make sure your preparer doesn't ignore the Head of Household Status. This status is for unmarried individuals who provide a home for certain other persons but the IRS defines  "unmarried individual" as : as of Dec. 31st of the said tax year, you were unmarried or legally separated under a decree of divorce or separate maintanance. So even if you are married and the other rules apply you may be able to file under the Head of Household Status. Again ask your preparer.

• Qualifying Widower w/ dependent child: If your spouse died 1 year or 2  years before said tax year (example: tax year ending 2004, spouse died in 2003 or 2002) , you did not remarry that tax year & you have a dependent child you may be eligible for Qualifying Widower Status. Certain rules do apply so ask your preparer.

 

2.   Dependents:  Sometimes you may have more dependents than you may be aware of.

• Many times people assume the dependent has to be a relative, thats not so. If the person is not related then they had to have lived in your home all year as a member of your household. Your parent, in laws, best friend may qualify as a dependent, and no, your dog may be your best friend but he/she does not qualify.

• Your dependent child: Often I have seen people assume since their child is working and over 18 that they cannot claim them as a dependent. This is not always true. You can ask your tax professional more about the income test for your dependent child.

• Your Spouse: sometimes you can even claim your spouse as a dependent, even if you are not filing jointly.

 

3. Income: Often times I have seen people try to "avoid" including w2's or other sources of income they may have received on their 1040. This not only is illegal but may actually give you less of a refund. Less of a refund? How could that be? Usually this involves lower income taxpayers who may be eligible for tax credits such as the EITC or Additional Child Tax Credit or Earned Income Credit (EIC). Ask your professional.

Below find some income taxpayers may try to "hide" that actually may hurt them.

• Self employment: maybe you started a business during the later part of the year. Did not make a lot of money but sure put a lot of money into it so you actually had a business loss? Yes, a business loss lowers your taxable income.

                               Example: your w2 income is $28,000, you have a business on the side that you put more money into than you made,  your loss is: $3,000. That is $3,000 less you will be taxed on. So your $28,000 w2 income is reduced by $3,000 making it $25,000 instead. Maybe you used part of your home as an office, this is often a great deduction, even putting some businesses at a business loss.

• Household Employee: maybe you work full time at one job but work part time as a household employee. If your in the low income range that household employee income may actually get you more money back.

 

4.  Moving Expenses: If you moved in connection with your job or business or started a new job, you may be able to take this deduction. Uhauls, hotel stays, gas & more may add up to a nice deduction for you.

5.  Alimony Paid: If you paid alimony in the said tax year to or for your spouse or  former spouse you may be able to take this deduction.

6.  Blindness: If you are blind or partially blind you may be able to get a credit deduction. You will need a certified statement from your eye doctor or registered optomitrist first.

 

7.  Standard vs. Itemized Deduction: My favorite deduction to get the mamimum refund for my clients. Do not assume your better off taking the standard deduction. Remember you have a choice of one or the other and cannot get both. Basically it is more advantageous to take the standard deduction if none of the following apply to your situation.

Though just because some deductions may apply does not mean you should take the Itemized Deduction. You want your total itemized deductions to be at least higher than the standard for your filing status and just because they add up to a higher amount than your standard does not mean you should ( or even can) take the itemized deduction. You do not always get a full deduction on what you actually paid, such as charities and medical expenses. For 2004 the Filing Status deductions were: Single or Married Filing Separately $4850, Married Filing Jointly or Qualifying Widow/er $9700, Head of Household $7150

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