Maximizing Your Tax Refund: Essential Strategies Before the April 15, 2025 Deadline
It’s that time again! Tax season is just around the corner, and now is the time to start organizing. Let’s dive into some important changes to keep in mind for this year’s filing and our tips on how to maximize your tax refund!
Important Changes to Keep In Mind for 2024 Filing:
According to the official IRS website, there are a few significant changes to keep in mind for 2025 tax filing.
First, The IRS will accept Forms 1040, 1040-NR, and 1040-SS even if a dependent has already been claimed on a previously filed return, as long as the primary taxpayer on the second return includes a valid IP PIN. IP PINs are available for taxpayers to protect personal and financial information.
Second, taxpayers who received over $5,000 in payments for goods and services through an online marketplace or payment app in 2024 should expect a 1099-K form.
Additionally, the IRS stated a critical reminder that, as with previous filing years, taxpayers must report all digital asset-related income when they file their 2024 federal income tax return, such as convertible virtual currencies and cryptocurrencies, stablecoins, and non-fungible tokens (NFTs).
How to Maximize Your Tax Refund for 2025
When organizing your 2025 tax return, we recommend following these steps to maximize your final tax refund.
Step 1: Consider Itemizing Your Deductions
One way to potentially increase your tax refund is to itemize deductions rather than taking the standard deduction. For example, the standard deduction for a single filing would be $14,600. So, suppose you expect to have significant expenses like mortgage interest, state and local taxes, high medical or dental expenses, or considerable charitable donations. In that case, you may get a higher tax refund if you take the time to itemize your deductions.
Step 2: Take Advantage of Tax Credits
One of the best ways to maximize your tax refund for 2025 is to analyze what life changes you’ve experienced in the past year may now make you eligible for tax credits. Purchasing a home, losing a job, getting married or divorced, losing a spouse, welcoming a child or gaining a dependent could all potentially provide a greater tax benefit. A few of the life event tax credits the IRS particularly notes are the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC), and Child and Dependent Care Credit, and the Credit for Other Dependents (ODC).
Other tax credits that often go underutilized are homeowner, vehicle, and energy-related credits. Inside your home, these can include everything from new windows and insulation to high-efficiency appliances. Alternatively, if you bought an electric vehicle, you may also be eligible for clean energy credits there!
Step 3: Contribute to Retirement and Health Accounts
Another effective strategy to maximize your tax refund for 2024 is to contribute to your retirement and health accounts. Contributing to your 401(k), IRA, or HSA is typically made pre-tax, which means every dollar you contribute reduces your taxable income for the year. Not only does this contribution lower your reported income to get a higher tax refund, but the funds will grow tax-free until retirement.
It’s important to remember the contributions allowed for each account for 2024 and that you have until the tax filing deadline (usually in April of the following year) to make contributions to your IRA for the previous fiscal year.
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Want to learn more about how you can make your money work harder for you? Schedule a consultation with us at DeWitt & Dunn today!