Advance planning is the key to getting a bigger income tax refund. Waiting until you're ready to file your return is too late to take most of the steps that will reduce your taxable income for the tax year. For starters, a taxpayer can adjust how much money goes into the tax pot, either from employer withholding or estimated tax payments. There can't be a refund unless those exceed the tax owed.
Maximize the amount you put into a retirement account, often the largest single deduction allowed on a Form 1040 income tax return. For 2013, an employee can put up to $17,500 into a 401(k), 403(b) or 457(b) employer-sponsored plan or up to $5,500 into an individual retirement account. Those over 50 can put an additional $5,500 into an employer plan or $1,000 into an IRA, and a couple filing a joint return can take a double deduction with two IRAs.
Make charitable contributions, either in cash or goods. Get receipts for donations and a value assessment for any large gifts of merchandise, for instance a car donated to a charity. Keep track of mileage if you drive a car for a charity and deduct any tolls or parking fees too. You can even deduct such expenses as stamps for a charitable mailing as long as you aren't reimbursed for them by the organization.
Take all your exemptions. You get $3,800 for you and a spouse and each dependent, including any children up to age 24 who are full-time students. You also can get a tax credit for care of children and dependents who are unable to care for themselves. That can be up to $3,000 a year or $6,000 if there are two qualifying individuals, a child under 13 or a spouse or other dependent who lives with you.
Don't forget home loans. You can deduct 100 percent of the interest on home loans up to $1 million -- up to $100,000 in interest for couples filing joint returns. You can deduct interest on a second home, too, and also can deduct interest on a home equity or home improvement loan secured by the home. That also includes interest "points" paid on closing a new home mortgage.
Look for other deductions, like state income taxes or expenses for looking for or moving to a new job. You can deduct travel and lodging and employment agency fees for job-hunting in your current line of work if you were unemployed. Those are limited to amounts above 2 percent of your gross income, however. Expenses of moving yourself and your possessions for a new job are deductible if the move is more than 50 miles farther from your old home than your old job site was from your old home.
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