Get a BIGGER Tax Return
It’s that time of year again. The time many of us cringe, while others still cringe, but rather with anticipation and planning. It’s time for taxes and tax returns. Well, hopefully you get a return and don’t have to pay.
What I typically hear people doing with tax returns is treating themselves to something quite nice, whether it be a vacation, new car, new workout equipment, or another treat. Yes, it is nice to do this for yourself every once in awhile, but bare in mind the amount that you are spending. Try not to blow it all at once, and then dip a bit into any small bit of savings you have on top of that.
What I have done year after year is add my tax returns up and dump them into an investment for myself. In the past, it has been my student loans. Is paying off student loans really an investment? I think so. You owe money and over time have to pay interest on that money back. By paying off loans, you’re actually saving money in the long run. Odd concept and way to look at it? Yes. However, doing this over the years, I was able to successfully pay off all student, and other debt that I had accrued by the age of 26. It’s a liberating experience to add that extra money back into your budget, rather than budgeting it away to loans…So, what will I do with this years tax return? I am honestly unsure. I will likely invest part of it, save some, and put a little away into a fun/travel pool for myself.
Are you not getting a return? Here are some ways to increase your chances of receiving that nice lump sum right around this time of year:
1) Claim lower exemptions on your W-4
Claim 0 instead of 1 on your W-4. When claiming 1, more money is left in your paycheck because fewer taxes are taken out. However, this also increases the chances of you having to PAY into taxes at the end of the year. By claiming 0, more taxes are taken out of your paycheck, leaving you with less money each month. However, this increases your chances of a tax return.
2) Start a business
Starting a business, whether home based, or not, will allow you to claim more deductions on your tax returns, lowering your taxable income. Thus, increasing the potential for a tax return. If this sounds like something that would interest you, you’re not alone. About 135,000 other Americans are getting on board with this same though each week. However, look into each one of them, and make sure they’re quality businesses. One that is still at its infancy stage, is rooted with science, and is setting the bar for industry standards can be viewed here: Home Based Business
3) Donate
Tracking your donations (whether clothes to Goodwill or Salvation Army or funds to a charity or organization) will lower your taxable income. You’ll also probably feel better about yourself too.
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4) Budget your own tax return
This is something that I am personally trying this year, and it makes great cents! Budget out a certain amount of income into a tax fund. This fund may cover taxes that you will be required to pay after filing, pay for someone to file your taxes for you, or even give you an additional refund on top of the federal/state refund that you may be granted.
Making good financial decisions takes disciple and restraint. However, it also relieves loads of stress from your psyche. Learning some basic techniques of increasing tax returns helps during the spring; however long term budgeting is key to financial success. More tips and tricks for budgeting will be covered in later posts.