One of the primary concerns on taxpayers' minds during the tax season is how to get the most money back or pay the least amount of income tax when they file their tax returns. Unfortunately, many people tend to do little or no research on this topic, which often causes them to pay more income tax than they really owe. To help you avoid making such a mistake, this article will touch on some of the ways you get the most out of your tax return.

Claim All Deductions
Deductions, in a nutshell, are simply qualified expenses that reduce your taxable income. Most taxpayers tend to focus on the common and well know deductions, but there are several uncommon deductions you may qualify for. Examples include:

  • Fees and dues to professional societies: You might have paid these fees to maintain your membership for professional purposes, such as maintaining a professional certification, maintaining your membership in a civic or public service organization or your membership in a business league.
  • Job search expenses: You can deduct expenses related to job-searches - even if you did not get a job - as long as the job you were looking for is one in your present occupation.
  • Travel expenses: If you had to travel away from home on a temporary assignment for work, you might be able to deduct related travel expenses.
  • Charitable donations: If you made donations to charitable organizations such as the Salvation Army, the value of the items donated is deductible. Be sure to keep receipts for your donated items as the IRS requires that you have written confirmation for all charitable donations. But 2014 is the last year in which you can take a distribution from your traditional IRA and exclude it from taxation if you donate it directly to charity.

These are just a few of a long list of items for which taxpayers may claim a deduction if they are eligible. You may need to meet special requirements for some deductions, so be sure to check and make sure you are eligible before claiming any of these items on your tax return.

Claim Credits
Credits are much more effective than deductions at reducing your tax bill as they are netted directly against the amount of income tax that you owe instead of merely reducing the amount of income upon which you owe tax. Available credits include the following:

If you are eligible for these credits, they can substantially reduce or even eliminate the amount of tax that you owe and thus increase your refund. They can actually provide you with a refund in some cases even if you had no tax withholding from your income for the year.

Should You Itemize?
Something that every taxpayer should take into account is whether or not he or she should itemize deductions. Generally, you should itemize your deductions if it results in a lower taxable income than if you claim the standard deduction. However, there are certain cases in which you will have no choice. For example, if you file a joint return with your spouse and you itemize your deductions, your spouse must do so as well. Itemizing your deductions is recommended if you:

  • Incurred substantial unreimbursed medical and dental expenses.
  • Paid interest or taxes on your home or other personal property.
  • Incurred substantial unreimbursed employee business expenses.
  • Had large unreimbursed casualty or theft losses.
  • Donated large contributions of cash or tangible goods to charity.

In 2014, there is an adjusted gross income (AGI) threshold phaseout schedule for higher income filers who itemize their deductions. Following the instructions for filing your tax return can help you to determine these limits.

The Bottom Line
There are special rules that apply to claiming deductions and credits on your tax return. The IRS provides a wealth of information on its website, including complete instructions for filing your tax return with all the supporting schedules. And if preparing your return becomes too complicated, don’t hesitate to seek professional help. This may seem expensive, but it will be money well spent if that professional gets you a larger refund or prevents your return from being selected for auditing by the IRS.

Related Articles
  1. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  2. Taxes

    How To Get The Most Money Back On Your Tax Return

    Many people pay more taxes than they have to simply because they don’t know better. Here are a few suggestions for getting the most out of your tax return.
  3. Taxes

    Tax Issues For Same-Sex Spouses

    The tax rules for same-sex spouses are largely the same as for traditional filers, but there are a few special considerations that apply.
  4. Taxes

    Tax Breaks For Second-Home Owners

    Owning a second home is a great investment for a variety of reasons, but you need to know the tax implications of multi-home ownership.
  5. Taxes

    Tax Software Vs. An Accountant: Which Is Right For You?

    We look at the pros and cons of using tax software versus an accountant when filing your tax return.
  6. Savings

    Tax-Smart Ways To Help Your Kids/Grandkids Pay For College

    Learn about plans and accounts that allow you to efficiently save for your child or grandchild’s education while shielding the savings from the IRS as much as possible.
  7. Insurance

    How Obamacare Is Raising Your Taxes

    There are literally dozens of new, amended or broadened tax provisions under the Obamacare legislation. Find out how your taxes will be affected in the years to come.
  8. 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.
  9. 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.
  10. 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.
RELATED FAQS
  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. 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 >>
  6. Is dental insurance tax deductible?

    Dental insurance premiums may be tax deductible. To be deductible as a qualifying medical expense, the dental insurance must ... Read Full Answer >>
Trading Center