Ways to Increase Your Tax Refund

It is that dreaded time of the year when everyone has to gather their receipts if you can find them to begin preparing to file taxes. Many argue that we should have a flat tax for all Americans. There are pros and cons to having a flat tax.

For now, we all have to pay our taxes or suffer the consequences like Wesley Snipes and be sent to jail. Some people try to avoid paying taxes by filing for bankruptcy but not all taxes can be included in bankruptcy.

If you plan on filing taxes this year here are some ways to increase your refund.

1. Tax Deductions. Check your health care costs, mortgage interest, closing and settlement costs, job-related expenses, tax preparation fees, moving costs, student loan interest or credit card interest which are just a few you can claim to increase your tax deductions.

2. State Sales Tax. If you live in a state that does not charge state taxes you can either deduct state and local sales taxes or state and local income taxes but you cannot deduct both. If you choose sales tax remember to include all items eligible for sales tax. Check the IRS website sales tax tables for your state.

3. Refinance. Don't forget to include your refinance costs when filing. When you refinance you have to deduct the mortgage points over the life of the loan so it's better to refinance for less time than your original loan. If you previously had a 30 year loan refinance to 20 years or less.

4. Property Tax. File a Schedule L to claim the property tax for personal property including car registration fees.

5. Casualty Loss. If you claim the standard deduction you can add casualty loss to your standard deduction amount if the loss occurred in an area that was declared as a disaster area by the President. You will have to file a Schedule L with your tax return to include the loss.

6. Read. Read the federal and state tax booklet that corresponds with your tax forms to make sure you are not overlooking any tax credits that you may be eligible for.

7. Avoid Rapid Refund. Don't get a rapid refund or loan. These usually have high interest rates and may not provide your refund faster than filing electronically.

8. Use Software. There are several free tax software available that you can use to file your taxes. Check frequently for software updates that may include additional tax deductions. Also look for free tax filing services in your area.

9. Reinvested Dividends (DRIP). Reinvested dividends cannot be deducted on your taxes but you can subtract the amount from your total taxable income which can save you money because it reduces your taxable capital gains.

10. Estate Tax. If you inherited an Individual Retirement Account (IRA) from an estate that was subject to estate taxes you can get an income tax deduction for the amount of estate tax paid on the IRA you received. You can claim an itemized deduction on Schedule A which will save you money.

Organization is The Key to Filing Taxes

Every year Americans have to file their taxes unless they don't earn enough income to qualify having taxes taken out. There are tons of tools available to help prepare your taxes and determine if you will get a refund or owe money. Some of the most widely used tools are Turbo Tax, Tax Cut and Quicken.

One of the reasons many Americans end up owing taxes or miss out on claiming deduction is because their financial papers are not in order. Many throw away, misplace receipts or even falsify documents because the original document cannot be found.

Don't wait until the last minute, this year start early and gather all of your financial paperwork. You can use an automated tool to track your spending and deductions or use a piece of paper, or word processing software such as Excel or Access. Getting organized will help you to see right away what deduction you can qualify for.

Using a tax preparation tool has all the tax laws imbedded in the tool which makes it easier for you to see what deductions you are eligible to claim. Here are 6 tips to help you get organized this tax season.

1. Gather. Gather all receipts, monthly, quarterly and yearly statements, medical bills, student loans, credit card statements, prescriptions, financial statements, etc. and place in one easy to find location.

2. Automation. Use a software package like Quicken or Quick Books to record all of your deductions. Use basic column headings: Item, Date Purchased or Sold, Cost, Quantity, Total Cost.

3. Categorize. Identify all items that can be used as itemized deductions and put them in one folder. Determine if the standard deduction for your tax bracket is greater than your itemized deductions. (This can be found in the IRS tax manual by using the items identified in tip 2). If not (standard deduction is less than itemized deduction), use the worksheet included with your IRS tax booklet to calculate your itemized deductions.

4. Go Green. To save money file your taxes electronically. You will receive your refund in approximately two weeks from the date of filing and you help save the environment.

5. Be Patient. Don't get a tax refund loan (rapid refund) or refund anticipation loan. You are charged a fee to get the refund loan which usually has high interest rates and associated fees. Save yourself time and money.

6. Free Filing. If you salary is less than $52,000 or less you can file your taxes electronically for free.