Tax season can feel like a game you never quite know how to win. One year, you’re celebrating a fat refund, and the next, you’re wondering, Why is my refund so low? Did I miss something?
But the right question will be, How do I get a better refund next time? And that is exactly what we are going to answer in this blog. Here are four simple things you should consider to boost your tax refund (And, no, you don’t need a degree in accounting to follow these!)
Rethink Your Filing Status
Your income tax status informs the Internal Revenue Service (IRS) about you and your tax situation, which can significantly impact your refund amount. The five statuses are:
- Single
- Married Filing Jointly
- Married Filing Separately
- Head of Household
- Qualifying Surviving Spouse
If you’re married, rethink filing jointly vs separately. Sometimes, filing separately helps if your spouse has major medical expenses or high deductions. Computing taxes might take a bit longer, but it can lead to a larger deduction. Moreover, the Child Tax Credit is also available to separately filing spouses.
If you’re single and support a child or a relative, you might qualify as a Head of Household, which offers a bigger deduction than Single Filing.
The bottom line is to take a closer look at your filing status to make sure you’re getting every advantage possible.
Explore Tax Credits
Tax credits are one of the best ways to boost your refund because they offer a dollar-for-dollar tax reduction. Many taxpayers leave money with tax credits simply because they don’t know they exist.
Common tax credits include:
- Work Opportunity Credit
- Lifetime Learning Credit
- Retirement Savings Credit
- Home Energy Credits
- Education Credits
Embrace Tax Deductions
Making use of tax deductions is another way to maximize your tax refund. Deductions come from a wide range of everyday expenses, and many of them are overlooked. They include:
- State sales tax
- Student loan interest
- Out-of-pocket charitable contributions
- Mortgage payments
- Classroom supplies for teachers
- Certain medical expenses
Remember to keep accurate records for your deductions. You don’t need fancy, government-stamped documents. Receipts for donations or even a spiral notebook with the dates and amounts of deductions would work just fine.
File Early and Accurately
Waiting until the last minute to file the taxes–we’ve all been there. But filing early can help you score faster, and most importantly, a bigger refund. However, if your refund is still low after filing early, you can learn more about why is my refund so low.
According to TurboTax, there can be several factors and reasons for this. One of them is filing late. When you file early, you’re less likely to make mistakes like entering the wrong Social Security number or bank details. You will also have time to double-check everything before you hit Send.
Filing early will also give you the time to gather the necessary documents, such as W-2 forms, 1099 forms, and interest statements.
Bonus tip: Use online tools and apps, such as digital expense trackers and spreadsheet templates, to stay organized.
Maximizing your tax refund isn’t about luck: It’s about strategic thinking and making the right moves. From rethinking your filing status to exploring tax credits, small steps can turn into big returns.