It’s hard to keep track of all the different tax breaks, and overlooking one can mean missing out on a large chunk of money. The experts at TurboTax and B&R Block break down how to get the most from your tax return.
Add to Your Retirement Fund
Use retirement contributions to benefit your return. TurboTax says that in addition to the maximum IRA(s) contribution of $5,000 being deductable, adults 50 and older can contribute an additional $1,000 if made by the April 15.
The Tax Institute at H&R Block suggests that all taxpayers take advantage of the Tax Relief Act of 2010 which entitles you to a 2% raise in 2011. I am not sure what this means, does this impact how you file?
Using Capital Gains to Your Benefit
TurboTax points out a capital gains loophole: If you have mutual fund dividends automatically invested in extra shares, remember that each reinvestment increases your "tax basis" in the fund. That then reduces the amount of taxable capital gain (or increases the tax-saving loss) when you sell your shares. You can overpay in taxes if you forget to include the reinvested dividends in your cost basis-which you subtract from the proceeds of sale to determine your gain.
Don’t Overlook Caregiver Tax Credits
The Tax Institute at H&R Block points out there are benefits for taxpayers supporting multiple generations of their family. Those supporting their parents and their own children are able to claim a $3,650 dependent exemption for a parent.
Filing on Your Own
Turbo Tax suggests filing your own 1040A OR 1040EZ form. “Americans spent $2.5 billion on preparer fees, when they could have easily done it themselves for a fraction of the cost.”
Kids Bring Tax Breaks
Congress recently extended the American Opportunity Credit which allows taxpayers to claim up to $2,500 of the cost of qualified tuition and related expenses paid during the year.
Going Green to Earn Green
H&R Block reminds you that the energy credit for 2011 has been reduced to $500 from $1,500. If you have not claimed the credit in previous years you can claim the entire $1,500 on their 2011 tax returns.
The experts at TurboTax and The Tax Institute at H&R Block recommend the following tips to maximize your tax return this year.