Maximizing tax refunds still possible at the deadline
Published 12:00 am Sunday, April 15, 2018
Good news for procrastinators: You have a little more time to file your federal income tax forms.
Tax day this year is on Tuesday because the usual deadline falls on a Sunday. And Monday is Emancipation Day, a holiday observed in Washington, D.C.
Still, the deadline is creeping up. If you haven’t filed, there are a few things to keep in mind.
You can still take steps to boost your refund. You can contribute to a health savings account or an individual retirement account, if you have them, right up until the filing deadline and lower your taxable income for the 2017 tax year.
Paul Joseph of Joseph & Joseph Tax & Payroll in Williamston, Michigan, calls the IRA contribution one of the most advantageous things you can do to reduce your tax burden.
Kimberly Butler, a tax preparer who manages two Chicago H&R Block locations, said that mistakes become more common when procrastinators rush. She said some people miss out when their tax status changes because of a life event like a new house or a baby, and they leave a big potential deduction associated with their changed tax status on the table.
Others forget to take advantage of common deductions and credits, like student loan interest, or fail to explore options they don’t understand, like the earned income credit.
Itemizing takes work, but it’s worth it, Butler said. Even a box full of receipts can lead a tax preparer to find some hidden refund opportunities, so it’s advantageous if you have a home, kids, or a newly complicated tax situation.
While it tends to be common knowledge that charitable contributions are deductible, so is your mileage to a volunteer job, a secondhand store to drop off a donation or to medical appointments.
Joseph said he sometimes goes through a client’s checkbook to make sure they are maximizing their deductions, and often they’ve missed things as small as mileage, or as big as having an aging parent live with them and failing to claim them as a dependent.
It may sound basic, but keeping all your tax documents in one place, including your W-2 and all applicable interest statements, is key to making sure you get all the deductions you are eligible for, said Chris Mann, a tax attorney. It’s too easy to overlook a deduction or skip something if you get frustrated looking for a form, he said.
We know what you’re thinking: It doesn’t matter how late I file my taxes, as long as I get them in before the deadline. But the longer you wait, the better chance there is that someone will steal your identity and file a return in your name in an attempt to snag a refund, Joseph said. That’s why it’s especially important to request a PIN from the IRS. The PIN will provide an extra layer of security and help prevent identity theft.
The current tax season is a good time to check your withholding allowance. Life changes, coupled with adjustments made to withholding tables by the IRS in concert with the new tax law, mean many Americans run the risk of having either too much or too little money taken out of their paychecks.
“No one should ever celebrate getting a big tax refund,” Mann said. “Figure out why, and adjust your withholdings or exemptions.”