8 Little-Known Hacks To Save Most Money On Your Taxes
Remember all those times you passed notes to your crush in math class? Well, I bet now you wish you'd actually paid attention because it's tax season and WTF IS TAX SEASON?!
Well, find comfort in the fact that you are not alone.
It's only the very brainy who know how to crunch those figures and claim the right credits to ensure a glowing tax return. So, we found our very own tax nerd, one whose knowledge we can feed off like money-hungry zombies.
His name is Matthew Gilmore, a 26-year-old private equity analyst and seasonal tax preparer, and he's here to help us. Thank you, Matthew.
Here are his simple tips for maximizing a refund:
1. Don't do them yourself using TurboTax.
Dang -- that's definitely how I filed my taxes this year. Matthew said this is the "best way to mess up" due to the fact that there isn't one "cookie-cutter model" for doing your returns.
2. Don't go to H&R Block.
OK, interesting, because this was my second option. But he explained once you're lured in by its huge ad campaign, you're normally hit with a sizable fee that'll make a dent in your return.
3. Find a tax preparer.
This is the best way to make sure your taxes come out correctly. But make sure your tax preparer is using a professional program, such as Drake. Also, you shouldn't pay anymore than $100 for a single individual with standard deductions.
While these are hard to find, they do exist -- small family offices are usually the best. It's worth paying the $100 dollars to someone who can quickly analyze your situation and maximize your refund by understanding your profession, and itemizing your deductions for out-of-pocket job expenses incurred. Medical bills will help boost your state refund, but won't help you federally.
4. Go to school full-time (12 credits or more) and work (but keep it under $35,000).
There are some simple credits hacks to look out for, too. Matthew said "the American opportunity tax credit is for undergraduates and pays the most, while the lifetime learning credit will give you a boost as well (up to $2,500)."
He added the key to maximize this is to buy a computer and lots of school supplies, as these all boost your credit.
5. Know and understand your tax bracket.
This means knowing the percentage you're required to pay. Matthew explained,
If working multiple jobs, this becomes more complicated, as each employer taxes you in the lowest tax bracket until you maximize that threshold. Your gross income becomes consolidated on your return, and your ultimate tax bracket is based exactly on this. The solution for people who owe money at the end of every year (and are probably working multiple jobs, receiving multiple W-2s) is to change your federal and state exemptions to zero. The w-4 forms are tricky and misleading, fill out zero on this form always.
6. Track your receipts in a spreadsheet.
This saves you and your accountant time. However, Matthew urges us to remember you either get standard deductions or itemized deductions, "so to use itemized deductions they must be greater than your standard deductions."
If you receive untaxed bonuses, or receive a 1099 from your employer at the end of the year, put between 20 to 30 percent of your earnings aside to pay the government at the end of the year.
8. If all else fails, start having children and receive child tax credits.
Matthew Gilmore, everyone: Dabbing his way into our tax returns since the early tenties.