Get the Biggest Tax Refund Legally
It’s the best time of the year to make sure you get the biggest tax refund as you approach tax filing season.
In fact, about 75% of taxpayers received their biggest tax refund in the last season, with an average of $3,000 as direct tax refund per deposit. However, while these people were cashing out their most significant refunds, some filers did not get the tax outcome they expected.
You can minimize your tax liability and snag a massive refund if you take advantage of every tax break that’s available to you. This article will inform you about strategies that will help you maximize your tax refund without cutting corners.
Here are three strategies that can help you maximize your tax refund.
- Find out about the tax benefits provided by coronavirus relief measures.
- Consider your filing status.
- Claim a relative or friend you have been supporting.
Take advantage of the tax benefits provided by the coronavirus relief measures to get the biggest tax refund
In 2020, several events impacted the lives of many. If you were affected by these events, you might have some tax implications, which may also bring you tax relief from the coronavirus relief packages. These stimulus payments are usually not taxable. It means when you don’t receive the full stimulus payments, you have the opportunity to claim them when you file your taxes. This recovery credit can either increase your refund or reduce what you have to pay.
Consider your filing status
Another strategy that can help you gain a significant impact on your tax refund is your filing status. For married couples, you can file jointly. For instance, if your spouse has a massive amount of business or medical expenses, filing separately will only increase the deducted amount and reduce your gross income. You can also miss out on crucial tax credits.
However, you can determine which filing status works better for you by estimating your returns with a tax return calculator.
However, if you are single, you can file for household status. However, to qualify, you must pay half the cost of maintaining a household.
Claim a friend or relative you have been supporting
If you have been helping a friend or significant other, here is the time to get something out of it. Though some rules are in place to guide who and what support qualifies, the deduction is legal if:
- A friend or significant other who has lived with you for at least a year.
- You provided for at least half of their support
- They didn’t earn more than $4,300 in taxable income
If you meet all of these, you will likely qualify for a dependent credit worth $500.
The bottom line is there are several legitimate ways to boost your tax refund. These methods are all about either optimizing your deductions, claims, or credits. You can also try other methods like filing under the right status.
Other tax tips you must understand:
- Invest with your refund. You can get a financial advisor to do this effectively.
- You can also put your refunds in a high-interest savings account. You can use either save with a goal in mind or build an emergency fund with it.
- You can also use it for financial gains, like using it to pay off your debts. If you have several obligations, you can channel the refund to the loan with the highest APR.