Hacks to reduce your taxes and maximize your refund

It's tax season. Here are some tips, from basics to options on reducing your taxes.

The income tax return is the official document through which you inform the Government of your income and expenses during the year.

Based on this information, calculations are made to determine whether you will have to pay additional taxes or if you have excess money (refund) from the taxes that have already been deducted from your salary.

This document is filed annually, with the deadline to file this year being Monday, April 15, 2024.

As a general rule, you have to file a tax return in Puerto Rico if you reside on the island and have had an income greater than zero, regardless of your marital status. If you are not a resident, you must file a tax return if you received an income greater than zero from sources in Puerto Rico.

Make sure to fill out your tax returns correctly and on time. Here we share some tips to help you understand the process.

• Create an account on SURI: This is the Unified Internal Revenue System of Puerto Rico, and it is the digital tool that the Department of Treasury provides to streamline the tax filing process. Opening an account will allow you to file your tax return electronically and have all your information integrated into the account.
• Review your documents: You will need income evidence through tax forms, such as the W-2 or Form 480's, depending on whether you are salaried or self-employed. You can access these documents through your SURI account, or they could be provided through your workplace.
• Seek help from an experts: If you prefer to delegate your tax returns to people who are experts in this subject, you can use one of the providers authorized by the Department of Treasury¹ or a private provider. Keep in mind that these providers may have fees for filing tax returns.

Make sure to maximize it, starting with the tax return filing process. Check if you qualify to increase your refund when filing.

• Verify eligibility for working credit: The working credit¹ could mean a saving on your taxes and more money in your pocket. The credit amount will depend on your income during the year and other factors such as marital status and number of dependents
• Verify eligibility for dependent credit: If you have underage dependents , you could qualify for the Child Tax Credit¹ through a federal tax return.

There are several ways to reduce the amount of taxes you pay to the government. For example, you can deduct the contributions you make to your retirement savings account, commonly known as an IRA³ from your income, and this might also be the case for other retirement saving options.

• IRA accounts: Prepare for your future by reducing taxes in the present. Open an IRA today, and depending on the one you choose, you could not only deduct your contribution from your income tax return, but you could also earn interest that is tax exempt.⁴ 
• Loans: If you are paying a mortgage or student loan, you could deduct part or all of the interest on your tax return, depending on your tax situation. You will find interest details on a tax form issued by the institution with which you have the loan. You must submit details and your tax return to get this deduction.
• Your 401K: Another way to reduce your taxes is through contributions to a 401K plan.⁵  This is also a way of saving for retirement and putting money to work for your future self. Although these contributions are not deducted directly from your tax return, they are deducted from taxable income. This means that when you receive a W-2 withholding statement, your taxable income will be reduced by allowed retirement plan contributions.  In addition, any earnings from the 401k will not pay taxes until the money is used.

If you can, invest or save the money that you have left over from taxes. Check out additional tools on Future Me page and start planning today for a better tomorrow.