As we prepare to enter into a new year, now is a good time to make a few simple, smart moves to help you maximize your return for the upcoming tax season. Here at United Credit Union, we want to help you make the best decisions with your finances, so we’ve compiled three effective moves to help boost your tax return.
Make a Donation
Donations made to tax-exempt qualified charitable organizations are considered tax deductible, which means that they can lower the amount of taxes you will pay. The holidays offer a great time for donations to local charities and organizations such as churches, nonprofit educational organizations, museums, volunteer fire departments, PATH, and Meals on Wheels. Consider offering monetary donations or non-monetary items such as clothes, household items, or food to your favorite charity or organization. These donations can be itemized as tax deductions. Additionally, if you volunteer with a qualified charitable organization, you can deduct your mileage (at 14 cents for every mile) driven for charitable service. Keep in mind that you will need to keep records and receipts for any donations or gifts to help you itemize your deductions. Examples of qualifying records are credit card statements, bank statements, cancelled checks, and receipts from the charity (including date of gift, amount of gift, and name of charitable organization).
Defer Your Bonus
If you are expecting an end-of-year bonus from your job this year, consider delaying the extra income until January if possible. Delaying the bonus can help you avoid paying taxes on that extra income (which could bump you up into the next tax bracket and increase the amount of taxes you will owe) and you will still receive your bonus close to the end of the year.
Spend your FSA
A flexible spending account (FSA) is an account that you put money into that can be used to pay for out-of-pocket health care costs and is a pre-tax benefit. An FSA is normally available through your job’s health care plan. Flexible spending accounts are unique because you do not have to pay taxes on the money. This means you can save the amount equal to the taxes you would have paid on the money you placed in the account. If you have an FSA and have money left at the end of the year, get caught up on doctor’s visits or other medical expenses. You might have to use the allotted FSA money within the year or might only be able to carry over $500 worth of unused money left in your 2019 FSA, so using the money already set aside will be more beneficial than letting it roll over into 2020.
Come by our location on Old Jacksonville Highway in Tyler or give us a call at 903-595-3506 to see how United Credit Union can assist with your financial needs.