Tax season can be stressful for everyone, especially for fathers who are trying to balance the role of parenting while figuring out how to get a larger tax refund. The right knowledge and strategies can help fathers maximize their deductions and receive a larger refund. This comprehensive guide will provide the best tips to help fathers enjoy a higher refund.
1. Filing as Head of Household
It’s essential for fathers to understand the differences in filing status. A person that is the primary custodian can often file as the head of household, which gives them more tax deductions and a higher refund when compared to filing under a single status. Consider working with a professional accountant to determine which filing status you qualify for.
2. Child Tax Credits
Parenting may qualify you for the child tax credit, which can reduce your tax liability by a couple of thousand dollars every year. Some of this money may make it back into your refund. Another common tax credit for children is the Earned Income Tax Credit (EITC). This credit is for low and middle-income parents and can have a substantial impact on your tax refund.
3. Deduct Childcare Expenses
Parenting is expensive, and childcare is one of the biggest expenses that parents face. It’s at least partially deductible every year. Throughout the year, save your receipts for childcare, and only use certified daycare. Then, when it’s time to file your taxes, make sure that you claim that deduction. Every deduction you can claim will help you get a larger refund.
4. Energy Efficiency Deductions
According to the International Energy Agency (IEA), about 180 million heat pumps were used in 2020 for heating. This shows us that more people are using energy-efficient heating methods. However, most people don’t know that they may qualify for deductions and tax credits. The government continues to offer incentives for energy-efficient upgrades. Keep your receipts and ask your tax preparer if you qualify.
5. Claim Your Child
Parents that aren’t the primary custodians often feel like they are out of luck when it comes to tax credits for parenting, but that’s not the case. Fathers can head back to court and request that they be allowed to claim their child every other year. This can help parents enjoy a larger tax refund when they can claim their child. Your lawyer can have it added to your parenting plan.
6. Donate to Charity
This is something that everyone can do to help lower their tax liability. A certain percentage of the value of goods donated, such as old clothing, is tax-deductible as long as you donate them to a qualifying organization. Goodwill is usually a qualifying charitable deduction. Cash donations are also deductible. Simply keep your receipts throughout the year.
7. Hire a Professional
If tax law isn’t your strong suit, consider hiring a professional. Inaccuracies can lead to an audit, and delay your tax refund. In 2018, the IRS expected to process up to 155 million individual taxpayer returns. This staggering volume shows how important it is for returns to be accurate and to be processed efficiently. Professionals can also help you find every deduction you qualify for.
8. Pay Off Due Taxes
If you owe taxes, it’s essential to pay them off as soon as possible. In 2020, the IRS stated Americans owed more than $114 million in back taxes, penalties, and interest. Paying off due taxes can help you avoid high-interest rates and penalties that will take a chunk out of future refunds.
Parenting is a thankless job that many of us take on with a smile. However, it can get expensive. Tax time is the perfect time to put some of your hard-earned money back into your pocket. Use the tips to help increase your deductions, get more tax credits, and enjoy a larger refund.