Didn’t get a refund this year? Check out these tips to increase your chances of getting one next tax season.
Tax season is coming to a close, though not everyone got money back. If you want to avoid owing taxes when you file next year, or if you’re simply looking to maximize your potential refund, here are tips on what you can do for the 2018 tax season.
1. Adjust Your Withholding
This may be the biggest, simplest change you can make now to impact your return for next year. Withholding refers to how much money you allow your employer to hold from your paycheck to give to Uncle Sam. By adjusting your W-4 to withhold more money, you’ll receive less per pay period, but you’ll increase your chances of getting a refund next tax season.
The recent Tax Reform means lower tax rates and increased standard deductions for everyone, making now an important time to check your current withholding. In addition, life change events, like getting a second job, getting married or divorced, or having a child, are good reasons to revisit your withholding throughout the year.
If you’ve been burned by unexpectedly having to pay taxes in the past, withholding more could be your solution. The earlier in the current year you adjust your withholding, the more impact it will have on your next return.
2. Check Your Filing Status
Your filing status is one of the first things covered when filing your tax returns, and it’s critical to how much you pay or get back. It determines your standard deduction, filing requirement, credits you’re eligible for, and the amount of tax you pay.
With five statuses to choose from, a little filing status research can go a long way toward getting a bigger refund.
3. Cash in on Credits
Credits work better than deductions as refund boosters because they reduce any federal income tax you owe dollar-for-dollar.
Earned Income Tax Credit (EITC): For the 2018 tax year, qualifying for the EITC can score you a credit of up to $6,431. In addition to meeting the following criteria, your investment income must be $3,500 or less—meaning you won’t qualify if you earn more than $3,500 in interest, dividends, capital gains, or even certain types of business investment income.