Maximizing Your Refund: 2020 Tax Return Information You Need to Know

Maximizing Your Refund: 2020 Tax Return Information You Need to Know

If you’re like most people, filing taxes is not exactly a pleasant task. It can be confusing and time-consuming, not to mention expensive if you have to pay a tax professional to do it for you. However, there are certain things you can do to make the process more manageable and, in some cases, even increase your refund.

Here’s what you need to know to maximize your refund when filing your 2020 tax return.

1. Take Advantage of Tax Credits and Deductions

Tax credits and deductions are two ways you can reduce your tax liability and increase your refund. Tax credits are a dollar-for-dollar reduction of your tax bill, while deductions reduce your taxable income.

Some common tax credits and deductions include:

– Education credits: The American Opportunity Credit and the Lifetime Learning Credit can both help reduce your tax bill if you or a dependent are in college.
– Charitable donations: Donating to a qualified charity can not only help those in need but also reduce your taxable income.
– Home office deduction: If you work from home, you may be able to deduct certain expenses related to your home office, such as rent or utilities.
– Child tax credit: If you have a child under age 17, you may be eligible for a tax credit of up to $2,000 per child.

By taking advantage of these credits and deductions, you can lower your tax bill and potentially receive a larger refund.

2. Be Aware of Tax Law Changes

Tax laws change frequently, and it’s important to stay up to date on any changes that may affect your tax situation. In 2020, there were several significant changes to tax laws, including the following:

– The standard deduction increased: The standard deduction for 2020 is $12,400 for singles and $24,800 for married couples filing jointly.
– Retirement savings contributions credit: If you make contributions to a retirement savings account, you may be eligible for a tax credit of up to $1,000, depending on your income.
– Increased income limits for retirement savings contributions: The income limits for making contributions to a traditional IRA, Roth IRA, or 401(k) have increased slightly for 2020.

By being aware of these changes, you can make more informed decisions when it comes to your taxes.

3. File Your Taxes Early

Filing your taxes early can help you get your refund sooner and may even reduce your chances of being audited. The sooner you file your taxes, the less likely someone else can file a fraudulent return in your name.

Additionally, filing early gives you more time to identify any errors or additional deductions you may have missed before you submit your return.

4. Seek Professional Help if Needed

While many people can successfully file their own taxes, sometimes it’s best to seek professional help. A tax professional can help ensure that you’re taking advantage of all available credits and deductions and that your return is accurate.

If you have a complex tax situation, such as owning a business or multiple investment properties, seeking professional help may be particularly valuable.

In summary, by taking advantage of tax credits and deductions, keeping up with tax law changes, filing your taxes early, and seeking professional help if needed, you can maximize your refund when filing your 2020 tax return. So don’t hesitate and start preparing early to get the most out of your tax refund.