Hello. This year I was quite upset with my tax return I got $993 back for 2011 and in 2010 I got almost $2K. Two reasons this happened, I made over $20K in 2011 and I went to school in 2010 and paid for my tuition.
My question:
Are there any books or websites that help you with detailed things on what you can add to your tax return? Like, medical bills I remember seeing on Turbo Tax, I wish I had known that because I paid a lot of medical bills in 2011 and didn't know you can get money back for that Like what can you get returns for, how do you keep track of it over the year, etc? I would like to know more about how to drive up your tax return as much as possible and how it works to the fullest without being an expert
Please and thank you!
Sat Feb 18, 2012 6:36 pm
coaster Senior Advisor
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If you allow me to rephrase your question, I think that what you're really asking is: "how can I take the maximum credits and deductions legally available to me, so that I have to pay the lowest net income tax that I can legally pay?"
It's not really very hard, but it does take advance planning as well as knowledge. For the knowledge part, start with the tax return itself. Closely look at the Federal Form 1040 and its supporting schedules: Schedule A for sources of income and Schedule B for sources of deductions. Study the categories of deductions on Schedule B and research what falls into each category.
When you understand what's considered income and then understand what's considered deductions, then you need to plan ahead for the next tax year so that you can keep records documenting your deductions. Keep the paper records. Turbo Tax's interview mode is very good at categorizing and organizing; provided you have all the numbers handy.
Sources for your research? Turbo Tax itself (the help section and the forms views); the IRS web site; any good tax intro book ... if there's a tax for dummies book they're usually pretty good intros.
Now here's why I rephrased your question: you want to direct your efforts at paying the least tax, NOT at getting the biggest refund. Getting a refund means you paid too much up front and you're just getting some of it back. Meanwhile, you haven't had the use of your own money during the previous year.
Best wishes and good luck; you're off to a decent start by asking at any rate.
mod's note: moved to tax forum
~Tim~
Sat Feb 18, 2012 7:22 pm
oldguy Senior Member
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quote: This year I was quite upset with my tax return I got $993 back for 2011 and in 2010 I got almost $2K. Two reasons this happened, I made over $20K in 2011 and I went to school in 2010 and paid for my tuition.
Yeah, you have a couple misunderstandings. First, your tax return is the form that you send to the IRS. The money that is sentback to you is your tax refund. Second - you want the refund to be small, or zero. If you get a big refund, that simply means that you overpaid all year, ie, you had too much withheld from your paychecks.
Sat Feb 18, 2012 11:55 pm
fast Senior Member
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quote:Originally posted by oldguy
quote: This year I was quite upset with my tax return I got $993 back for 2011 and in 2010 I got almost $2K. Two reasons this happened, I made over $20K in 2011 and I went to school in 2010 and paid for my tuition.
Yeah, you have a couple misunderstandings. First, your tax return is the form that you send to the IRS. The money that is sentback to you is your tax refund. Second - you want the refund to be small, or zero. If you get a big refund, that simply means that you overpaid all year, ie, you had too much withheld from your paychecks.
How about less than zero? Instead of getting a refund (which would be like a zero percent interest loan to the government), how about having too little taken out (which would be like a zero percent interest loan to the tax payer)? I'm not suggesting he do that. If I were to make a suggestion, I would suggest he target for what you said, a small or no refund.
Sun Feb 19, 2012 12:38 am
coaster Senior Advisor
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Less than zero is fine, so long as it's under the limits that trigger underpayment penalties.
From the IRS instructions for Form 2210:
quote:
Who Must Pay the Underpayment Penalty
In general, you may owe the penalty for 2011 if the total of your withholding and timely estimated tax payments did not equal at least the smaller of:
1. 90% of your 2011 tax, or
2. 100% of your 2010 tax. (Your 2010 tax return must cover a 12-month period.)
Those are just rough guidelines as there are all kinds of special cases, exceptions and so forth.
~Tim~
Sun Feb 19, 2012 5:56 am
AllegraLong First Time Poster
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All suggestions and ideas are so good. Do you know there are any books or websites that help you with detailed things on what you can add to your tax return?
quote:Originally posted by AllegraLong All suggestions and ideas are so good. Do you know there are any books or websites that help you with detailed things on what you can add to your tax return?
One good book from the IRS is Pub 17, Tax Guide for Individuals. The Pub is revised every year. If you want a hard copy that is FREE!
It is also available on line. http://www.irs.gov/pub/irs-pdf/p17.pdf
Fri Oct 05, 2012 11:01 pm
Balboa Capital Member
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Bigger tax return strategy
It's a good recommendation for you to consult with your tax professional to see how you can maximize your return each year. He/she can look at how you file and determine if your deductions can be changed to help you maximize your returns. For example, one can file single zero and have the most money taken out of his check, and this would them him get a bigger return. Obviously, there are many other things to look at, so make sure you discuss them with you accountant.
