Wondering how to get a bigger tax refund? Taking advantage of money-saving tax credits and deductions is just one way to maximize your refund. Here are some other strategies that will help you get a bigger refund on your taxes or at least help you pay no more than you owe.
Adjust your tax withholding
Are you having enough taxes withheld from your pay? If you’re unsure, use a withholding calculator to find out now. This will save you a lot of tears and heartache at tax time. Paying too little taxes means you’ll owe money when you file your return. On the flip side, you’ll receive a refund if you overpaid. It’s a smart idea to check your withholding at the beginning of every year and submit a new W-4 to your employer if adjustments must be made.
Save for retirement
Contributing money to a 401k or traditional IRA is a great way save for your golden years and reduce your taxable income. Since your contributions are pre-tax, every dollar you put in reduces your taxable income and you’ll pay less income taxes. You have until December 31st to max out your 401k which hopefully is something you were already working towards. For 2023, the contribution limit is $22,500 ($30,000 if you’re aged 50 or older). Taxpayers with a traditional IRA can contribute up to $6,500. However, the maximum limit is $7,500 for those aged 50 or older.
Contribute to a health savings account (HSA)
Contributing to an HSA is another great way to reduce your taxable income. For those who don’t know, an HSA is a savings account that’s lets you save pre-tax income for medical expenses. The HSA contribution limit for 2023 is $3,850 for individuals and $7,750 for families. Those aged 55 or older can contribute $4,850 for individuals and $8,750 for families.
Reconsider your filing status
Your filing status is important because it determines your filing requirements, standard deduction and which credits you’re eligible for. If you got married, divorced, or experienced some other major life change, it’s a good idea to reconsider your filing status. Remember, your marital status on December 31st determines the filing status you’ll use on your return. So, even if you got hitched in December, the IRS considers you married for the entire year and you can file a joint return with your spouse. It’s also worth noting that single parents can benefit more by filing head of household versus single because the standard deduction is higher. Making that simple switch can save you thousands of dollars. When you use ezTaxReturn, we’ll help you choose the best filing status.
Know which receipts are worth keeping
Holding on to the right receipts can help you save money especially if you plan to itemize. Generally, you want to keep anything related to your income, medical expenses, childcare bills, home, and charitable contributions. For a full list of everything that can save you time and money on your return, check out our tax prep checklist. Store your tax documents in a file folder and label each category, so it’s easy to find when you’re ready to file.
Claim your tax credits
The IRS offers a bunch of tax credits you can claim to reduce the amount of taxes you owe. Some of the most popular ones are:
- Earned Income Tax Credit (EITC) – The EITC was created to help working families with low to moderate incomes. If you have three or more qualifying children, you can receive up to $6,935 for tax year 2022. Taxpayers with fewer or no children can qualify for a smaller credit amount.
- Child Tax Credit – The credit is worth $2,000 per qualifying child under the age of 17.
- Child and Dependent Care Credit – You may qualify for the credit if you paid someone to watch your dependent while you went to work. For 2022, you can claim up to $3,000 of expenses for one qualifying person and $6,000 for two or more qualifying people.
Use ezTaxReturn to ensure you get every tax credit and deduction you rightfully deserve, so you get the biggest possible refund, guaranteed.
Don’t overlook tax deductions
Tax deductions reduce your income before taxes are calculated. Taxpayers have the option of choosing the standard deduction or itemizing. For tax year 2022, the standard deduction is $12,950 for single taxpayers and married couples filing separately, $19,400 for head of household and $25,900 for married couples filing jointly. If your deductible expenses are more than the standard deduction, it makes more sense to itemize. Allowable expenses include:
- State and local taxes
- Contribuciones benéficas
- Pérdidas de juego
- Home mortgage interest
- Medical and dental expenses (above 7.5% of your adjusted gross income)
Do your taxes with ezTaxReturn and we’ll compare your standard deduction versus itemized deductions, so you can choose the one that saves you the most money.