How To Get Maximum Income Tax Refunds
Everyone wants to get the most amount of money back from the money prepaid for income taxes and how to get the maximum income tax refunds requires a bit of work over the course of a year, but returns a larger amount after taxes are filed. Start getting your tax act together in December, before the new year begins. Getting the maximum income tax refunds means doing a few basic activities each week and buying a few things to stay organized, including;
- notebook with columns for recording numbers
- two different colored pens
- recent printout of new tax guide for the upcoming year
- set of 8 X 10" envelopes
- Pick up a book or print out the new tax regulations. Federal and state tax forms change every year. How to get the maximum income tax refunds depends on knowing the law and figuring out just what income tax deductions meet your individual situation. It's a tough read, but take one section of the tax section at a time and pull out your envelopes. The text is not tough, it's the slogging through the number of sections that is difficult. Some deductions are easy to determine. If you don't have any kids, don't bother to read that section. If you don't operate a personal business, skip that one, too. If you're not over 62 or have major medical expenses, forget that one. By the time you're done, you'll probably have six or seven segments of the tax code that apply to you.
- Make up the receipt envelopes. Make up your envelopes by putting topics on the outside of each one. If you have your own business, label one "Business Expenses." If you have any medical costs during the year, label another envelop "Medical." You get the idea.
- Segment the notebook for the year. Divide the notebook into the same categories you made for the envelopes. At the top of each section, put the same label to match the headings on the envelopes. If you have a small business or spend out of your own pocket for your work with others, you'll need a more sophisticated system that uses a separate set of envelopes and a notebook that you use strictly for the business. Don't co-mingle funds. Keep your work money separate from your personal money.
- Get some basic discipline. This is the toughest part of the program. How to get maximum income tax refunds requires that you actually put the receipts into the envelopes at least once a week. If you don't, odds are you won't remember what the receipt was for or how much of it applied to the deductions. When you buy an item, pay for lunch, or whatever your deduction may be, use the pencil and mark the details on the back of the receipts. For business deductions, for instance, write down the name of the person you took to lunch and what business was discussed. When you put the receipt into the envelopes, put the amount and date on the front. This is critical to getting a wad back in income tax refunds.
- Do due diligence with the calculator. Every month, do a subtotal of the receipts in each category. It takes a few minutes each month and hours if you wait to do it at tax time. Totaling each month helps you keep track of what you're spending.
- Check your figures. Add your figures twice and reread the sections of the tax code for the categories that you have major deductions in to make sure you aren't missing a detail or two.
- File early. Filing early gets money into your bank account to start earning interest.
Lasser, J.K. "Your Income Tax 2010." Wiley, 2009.