Changes in the U.S. economy force many taxpayers to look for ways to reduce their tax liability and, as a bonus, receive a larger tax refund check from Uncle Sam. Single, unmarried, tax filers without dependents are the hardest hit by income taxes because they don't have dependents they can claim as exemptions. Without a spouse, children or other dependents, single taxpayers also don't have many of the options that married couples or parents have for reducing taxable income through education savings, dependent care or the earned income credit. Nevertheless, a few adjustments throughout the tax year might result in a windfall in your next refund check from the Internal Revenue Service.
Review tax regulations, current income tax legislation and time-sensitive deductions to learn more about deductions and credits to which you might be entitled. For example, time-sensitive deductions and credits could include purchasing energy-efficient home improvement products such as windows or appliances. The IRS website and the U.S. government-sponsored Energy Star websites contain numerous publications that explain energy-efficient ratings and what purchases apply towards a tax credit.
Reduce your taxable income while keeping your withholding and number of exemptions steady. For example, increasing your contributions to your employer-sponsored 401(k) plan can significantly reduce your taxable income because your employer deducts contributions from your gross wages. Your payroll department then bases its tax computation on the amount remaining after it takes out your 401(k) contribution. Your company's benefits specialist can provide guidance on what impact an increased contribution level will have on your taxable income and your take-home pay.
Video of the Day
Purge your closets, basement and garage of unwanted items on a regular basis and maintain detailed records for donating them to charities. Every calendar quarter, gather items you no longer use or don't want, calculate the value and drop off the items at your favorite charity. You also can give them to a secondhand store that will give you a receipt for deducting the value as non-cash charitable donations -- stores operated by disabled veterans associations and the Salvation Army are your best bets. Invest in a software program for calculating and cataloging your donations. Many programs are simple to use and can extract data you input and format it so that it's compatible with online income tax filing software and IRS regulations.
Review your files for deductions you may have overlooked. Check your mortgage statements for interest payments you made every month -- these usually add up to an amount that can substantially reduce your taxable income. Obtain records for real estate and property tax payments to determine whether they are allowable as deductions.