You can probably think of a lot of things you would enjoy more than filing your tax return. But what other activity could net you a few hundred, maybe even over $1,000 in an hour's time?

All it takes to maximize your tax refund is a little preparation, keeping an open mind to tax credits, deductions and even forms you may not have thought about. Plus, asking for free help when needed. You might be able to get away with filing a 1040EZ. But if you want to find every way to increase your refund that's possible, the shortened IRS form that you could file in minutes may not work. However, you can prepare a full 1040 form to maximized tax credits and deductions in an hour or so. (For a whole lot more, check out our Investopedia Special Feature: Income Tax Guide.)

Have All Documents in Front of You
Gather your W-2s, bank, investment and student loan year-end documents. Since all of your tax documents should arrive between January 1 and January 31, you should create a folder or envelope to collect tax materials on January 1. Create a list of all accounts from which you are expecting to receive tax documents. Glue this list on top of the folder or envelope, and check off each document as it arrives.

On February 1, you'll need to call up whoever owes you a form to send you a copy. You may be able to get it faxed or e-mailed to you, so you can avoid waiting for forms to arrive by mail. Once you know what forms you have, you'll be ready for the 1040 instruction booklet's directions or tax software.

This is a detailed list of the documents you are looking for in the mail.

  • W-2s
    This is the form your employer sends you at the end of the year which states your total income, how much you've paid in taxes, etc…

    If you're an independent contractor, you'll be sent 1099s instead. These forms can have various letters attached, but as long as you follow the instructions in the 1040 booklet - and ask for help or turn to tax software when needed - you'll be raking in the refunds just like someone with W-2s.

  • Bank and Investment Statements
    Interest earned from interest-bearing checking accounts and savings accounts count as income. Dividends from investments also count as income. Your bank would send a 1099-INT and your investment company would likely send you a 1099-DIV, which is the basic form for income that doesn't come from an employer. Income earned on your 1099-INT and INT-DIV are taxed.

    However, with your investment account information, you will have to fill out a schedule B form and maybe a schedule D, for capital gains and profits for certain investments. (For further explanation of capital gains, read Tax Effects On Capital Gains.) The main thing you want to get out of this section is what information you need to gather before doing your taxes. And whatever you do, don't give up and not look for every deduction and credit possible. (To learn more, see Common Tax Questions Answered.)

  • Student Loans and Mortgages
    While you need to know your investment and savings account interest and dividends income for paying taxes, student loan and mortgage interest payment information helps you avoid paying part of your taxes. Interest that could be deductible is sent to you on a 1098.
  • Sales Receipts, Especially for Large Items
    For instance, in 2009, vehicle sales tax was highly deductible in the 2009 tax year.

Even worse, if you realize you don't have it while getting in-person help or calling the Internal Revenue Service to ask a question that involves the numbers on these forms, you could end up wasting time. (For more, read The Mortgage Interest Tax Deduction.)

Keep an Open Mind
You may qualify for deductions you would have never thought you would. Go through the 1040 booklet to completion before deciding on a 1040EZ.

Learn About Your Options for Free Tax Help
Call the IRS tax assistance line, go to an IRS office or use free tax software. Even if you file your taxes the old-fashioned paper way, the IRS tax line can help you with any questions you have (For further reading on free tax help, check out 6 Sources For Free Tax Help.)

You can throw away a lot of money by not going through your taxes to find every possible deduction. Don't rush through, and get help when you get stuck. You could be rewarded with a large chunk of money for your emergency savings, towards your home down payment or towards knocking out your student loan debt.

For further reading, check out 10 Most Overlooked Tax Deductions, Clearing Up Tax Confusion For College Savings Accounts and How To Owe Nothing On Your Federal Tax Return.

Related Articles
  1. Taxes

    Free 2016 Tax Preparation! Top Online Services

    A place that fills out and files your taxes free of charge? It's no myth, as long as you have a simple return. Read on to find the top preparers.
  2. Taxes

    Why People Renounce Their U.S Citizenship

    This year, the highest number of Americans ever took the irrevocable step of giving up their citizenship. Here's why.
  3. Taxes

    Taxes: H&R Block Vs. TurboTax Vs. Jackson Hewitt

    There are more and more tax services to help ease the pain of filing income taxes. Here's our take on three of the biggest.
  4. Taxes

    Confused About Estimated Tax Deadlines for 2016?

    If you run a business or have investment income, pay attention to this year's estimated tax deadlines. Here are the details, and what's new for 2016.
  5. Retirement

    Retirement Plan Tax Prep Checklist

    Here's a list of items you need to have in order by tax time, including paying attention to those pesky required minimum distributions.
  6. Taxes

    The Purpose Of The W-9 Form

    Businesses use IRS form W-9 to gather information from vendors they hire as independent contractors.
  7. Economics

    How Powerful Is The IRS?

    Historically, the IRS has wielded formidable power, and that power isn’t likely to diminish anytime soon.
  8. Taxes

    Avoid the Social Security Tax Trap

    Government benefits can cost you big money! Know the income thresholds before you file.
  9. Investing Basics

    Understanding How Oil Companies Pay Taxes

    Read about how big oil corporations pay taxes, and learn about tax exemptions and the option to defer. Discover the argument about big oil being given tax exemptions
  10. Entrepreneurship

    LLC Vs. Incorporation (Inc.): Which Should I Choose?

    Learn about the advantages of forming an LLC over a corporation, including ease of administration. Read about the advantages that a corporation may offer.
  1. When should my tax refund arrive?

    More than 90% of income-tax refunds arrive in less than three weeks, according to the Internal Revenue Service (IRS). However, ... Read Full Answer >>
  2. How do I file taxes for income from foreign sources?

    If you are a U.S. citizen or resident alien, your income (except for amounts exempt under federal law), including that which ... Read Full Answer >>
  3. Are Flexible Spending Account (FSA) items tax deductible?

    Flexible Spending Accounts (FSAs) are employer-sponsored, tax-favored savings plans expressly for the future reimbursement ... Read Full Answer >>
  4. How Long Should I Keep My Tax Records?

    The Internal Revenue Service (IRS) has some hard and fast rules regarding how long taxpayers should keep their tax records. As ... Read Full Answer >>
  5. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  6. Do tax brackets include Social Security?

    A portion of your Social Security benefits may be subject to federal taxation using tax brackets. Your tax bracket is determined ... Read Full Answer >>
Trading Center