Wednesday, March 9, 2016

Tax Refund Tips for 2016

According to the Internal Revenue Services, the nation's taxpayers received an average tax refund of nearly $3,000 in 2015. So what's the secret to getting a hefty tax refund? Read on for tips for a bigger tax refund in 2016.

  • Claim all deductions: In our rush to complete our taxes, we sometimes overlook the deductions that could greatly boost our refunds. If you've relocated in the past twelve months for work, include moving costs in your deduction. Student loan interest? Also counts as a deduction. Keep track of your charitable contributions, like Goodwill donations, too. They are all deductible!
  • Claim tax credits: It is possible to get energy credits on windows, doors, roofs, air conditioning and heating. There are also education credits for college costs for yourself, your partner, or a dependent. You could also be eligible for a childcare tax credit if your kids are under the age of 13 and need childcare.
  • Revisit your filing status: It's important to choose the filing status that best suits your needs, since your filing status determines your standard deduction, the credits you're eligible to receive, and the amount of tax you pay.
  • Timing is important: Savvy taxpayers mind the calendar to boost their refund. If possible, pay your property taxes and January's mortgage payment before December 31st for a bigger refund. Schedule any medical exams in the last quarter of the year to increase your medical expense deductions as well.
Following the above tips will help you get the most out of your tax refund. Once you receive your refund, it is just as important - if not more important - to use that money wisely. At McHenry Savings Bank, we suggest the following to make the most out of your money.

  • Save for emergencies: Open or add to a statement savings account that serves as an emergency or "rainy day" fund.
  • Pay off debt: Pay down existing balances either by applying your refund to your higher-interest loans or using it to pay off smaller debts.
  • Put it toward a down payment: It's hard to save up for a down payment on a house or vehicle. Save your tax refund to use as or put toward a needed down payment.
  • Invest in your home: Put your tax refund toward home improvements. This is considered an investment that will pay you back down the line by increasing the value of your home.  
If you have any further questions about making the most of your tax return money, stop by any of our McHenry Savings Bank branches or give us a call at 815-385-3000. Member FDIC.