3 New Year’s Resolutions that can Boost your Refund
by Susannah McQuitty
You got this—all you have to do is start!
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Yep, that’s a thing—you could actually boost your tax refund by sticking to your New Year’s Resolution. How’s that for motivation to keep trucking through?
Here are 3 good things that you can do over the next year that could also help on your taxes.
Start saving for retirement
Alright, you’ve decided it’s officially time to start saving for retirement one day. You’re hitting retirement savings head on this year, and there’s good news: You may be able to cash in on the Saver’s Credit.
If you open an IRA, 401(k), or similar workplace retirement account before April 15, 2018, you may be able to claim the credit, which is worth a max of $1,000 for single filers and heads of household and $2,000 for married couples filing jointly. Pretty sweet—you’ll be saving money by saving money. The credit is claimed on IRS Form 8880, and when you file with 1040.com, we’ll help you claim the maximum credit based on your situation.
There are a few more qualifications, so if you’re interested in finding out more, head over to our Tax Guide article on the Retirement Saver’s Credit. You can also read about other retirement tax breaks, like the tax deduction for IRA contributions and the tax-deferred treatment of 401(k) contributions, on our Tax Guide article on Investing and Retirement.
Take night classes
You’ve been saying it for years, but it’s finally time to make some space in your life to discover a new passion or earn another degree.
The Lifetime Learning Credit (LLC) can be used for graduate school and vocational courses, and there’s no limit to how many years you can claim it.
The Lifetime Learning Credit is nonrefundable, which means it’s limited to your tax liability (so if you qualified for the full $2,000 Lifetime Learning Credit and had a tax liability of $500 for the year, you’d only get a credit for $500), but it’s still a great way to save on your taxes next year.
Stay on top of your personal finance
If this is the year that you crack down on your spending and bust out the spreadsheets, one of the best things to do early on in the year is adjust your W-4.
Form W-4 is where you detail how much money you’d like your employer to hold out of each paycheck to cover your taxes. The more money your employer withholds for taxes, the more likely you are to have a refund in the spring. On the flip side, the less money your employer takes out of each paycheck, the smaller your potential refund. You can read more about adjusting your W-4 here.
And, of course, one of the best things you can do to stay on top of your finances is to keep up with the 1040.com blog and podcast. We’ll bring you helpful posts and episodes throughout the year on tax savings, budgeting and personal finance to help keep you in the know and on track.
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