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1. Choose the Right Filing Status

Your filing status plays a crucial role in determining your tax liability. While most married couples file jointly, it’s essential to consider other options. For instance:

• Married Filing Separately: Under certain conditions, this status can lead to tax savings. If one spouse has significant deductible medical expenses (like COBRA payments due to job loss), computing taxes individually might allow for a larger deduction.
• Head of Household: If you qualify, filing as Head of Household can result in a higher Standard Deduction and more favorable tax brackets than filing as Single.
• Don’t overlook these possibilities; they can significantly impact your refund1.

2. Embrace Tax Deductions

Commonly overlooked deductions can make a difference:

• State and Local Sales Taxes: If you live in a state without income tax, consider deducting sales taxes instead.
• Out-of-Pocket Charitable Contributions: Keep track of your charitable donations, including mileage if you volunteer.
• Student Loan Interest: Deduct the interest paid on qualified student loans.
• State Income Taxes: If you itemize deductions, don’t forget your state income taxes.

3. Maximize Your IRA and HSA Contributions

Contributing to an Individual Retirement Account (IRA) or a Health Savings Account (HSA) can reduce your taxable income. Remember that you can make contributions up until tax day, so take advantage of these opportunities.

4. Timing Matters

Be strategic about timing:

• Accelerate Deductions: If you expect higher income next year, consider accelerating deductible expenses into the current year.
• Delay Income: Conversely, if possible, delay receiving income until the following year to reduce your current tax liability.

5. Become Tax Credit Savvy

Explore tax credits that can directly impact your refund:

• Child Tax Credit: The American Rescue Plan expanded this credit for tax year 2021. Depending on your child’s age, you could receive up to $3,600 per child.
• Earned Income Tax Credit (EITC): Families with low-to-moderate incomes may qualify for the EITC, which can be substantial. It’s even refundable if you don’t owe any tax.

Remember, personalized advice from a tax professional is invaluable. Encourage your readers to consult with experts who can tailor recommendations to their specific situations. And as always, stay informed about any changes in tax laws!

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