lehighvalleynews

Get the most out of your tax refund

Author: Will Lewis, Reporter, Will.Lewis@wfmz.com
Published On: Feb 20 2012 09:46:15 AM EST  Updated On: Feb 20 2012 10:40:48 AM EST

Ways to increase tax refund

A nice fat refund check can make the aggravation of tax season worth it. But how can you make sure  you're getting back every last cent that you can?

Here's how to supercharge your tax refund.

Let's talk tax credit first.

For example, if you install a new solar water heater, you can qualify for a 30 percent federal tax credit.

The average tax refund for this year is expected to be $3,000.

If you spend that refund to buy a solar water heater, you're going to reduce next year's tax bill by 30 percent of that--or $1,000.

You can get up to $1,500 if you buy a fancier model.

Plus, experts say the water heater will actually pay for itself in energy savings.

If you don't want to make a big purchase this year, tax experts say you can use it to create an equally big deduction.

How? One way is by putting it in an IRA.

If you're eligible to deduct an IRA contribution, socking away $3,000 will lower  your taxable income by that much.

Depending on your tax bracket, you could save up to $1,000 on your 2012 taxes.

One more idea: donate part of your refund to charity. Now you've done a good deed for others and created a deduction for yourself.

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