Young professionals have been asking our firm “How do I give an extra boost to my refund?” and “Can you get me a big refund?” While most of your refund is dependent on your income and the federal and state withholding of that income, there are a few methods to boost your refund that are very doable.
1. Open a Traditional IRA and contribute to it. Many people feel that opening a Traditional IRA, a type of retirement/savings account, is out of reach because they barely scrape by financially. The truth is the typical traditional IRA only requires 500 dollars to open and contributions of as much or as little as you want after that. Opening an IRA is a good piece of financial advice in general, and it does benefit your tax refund as well. Every dollar put into an IRA is a dollar reduced from your Income. This means less tax liability and ultimately boosts your refund. Furthermore, it is best to maximize these contributions to boost your refund even further. L&A can set up a Traditional IRA for you if you so wish.
2. Time Your Expenses. It’s not too difficult to locate a list of tax deductible expenses. We have a planner on our website to aid in determining relevant tax deductible expenses. But to explain this tip it’s best to use an example. Sarah has dental work she needs done as well as new glasses and contact lenses. She figures she’s going to put off the eye needs until after the new year. But if she pays for all of these items in 2014 she boosts her refund. At L&A we like to call this technique “bunching.”
3. Maximize your Charitable Contributions. We all have stuff lying around our house that we have not used in a few millennium. A lot of this stuff can not be sold on eBay or in a garage sale. So why not donate it to a worthy cause? Wounded Warriors or Salvation Army or your local church will gladly accept your old clothes or household items. A lot of these charities will even come pick up your items from your home. Ask whichever entity you donate to to provide an Itemized Receipt. If possible ask for the Fair Market Value of the items donated. This is another way to give that extra boost to your refund.
Of course, these tips do not ONLY apply to young professional. These are just relatively attainable methods accessible and emphasized towards young professional. It is worth noting that Lavin & Associates can help you set up a traditional IRA. We can also consult you on other ways to help reduce your tax liability and maximize your refund. So hit the contact us tab at the top of the page to get in touch.