If you’re like most taxpayers, tax season means two things: Ugh! and money. Ugh should be pretty self-explanatory, since most people just hate doing their taxes. But once you leap over that hurdle and get down to filing, it’s all about the green. You want to know how much money you made, you want to reduce your tax bill, and ultimately, you want to see some money coming back your way in your tax refund.
But for most people, supercharging your tax refund is a lot easier said than done. It’s not because they don’t understand their taxes! (Okay, for some people it is that…) But for most people, filing taxes serves as such a headache-ridden chore that they really don’t care to think about it more than they have to. And so understanding their taxes ends up being good enough, when real tax savings requires a deep well of knowledge about taxes and finance.
In our decades-long mission to prepare error-free taxes for our clients, we’ve seen one thing over and over and over again. Typically, most people work to get their tax bill down to $0, but beyond that—they don’t always work to get every cent out of their tax refund that they can. When your income is on the lower end of the scale, that may only mean the difference of $10 or $20. But with higher and higher income, this means you might end up leaving hundreds or even thousands of dollars on the table!
Don’t allow yourself to be tempted by that $0 tax bill or low refund total. With the right moves, you can supercharge your tax refund and get the money you really deserve. It’s a lot easier than you might think. So we’re here with 10 expert tips to do just that and put money right back in your pocket—er, bank account. Right where it belongs.
Supercharging your tax refund comes down to taking the right steps during tax season—and year round. Fortunately, you have plenty of ways you can save money on your taxes and get the refund you deserve. So we’ll walk through ten of the best.
Your tax filing status lays the foundation for the rest of your tax return. And while it may seem pretty straightforward and easy to determine what your tax filing status should be, you might be surprised at the difference a change can make.
First thing’s first. Not everyone can change their tax filing status. If you’re single and live by yourself, you can’t just file as married! But for married folks, you can carefully deploy your tax filing status to access different deductions and tax credits depending on your financial situation.
Single: Unmarried people. Usually you won’t qualify for any other tax filing status.
Head of Household: Unmarried people who pay at least half the cost of housing and other living expenses and support for other people.
Qualified Widow or Widower: If you’ve lost a spouse recently and still need to support a child.
Married Filing Jointly: Married couples who, in most cases, merge their finances and want to maximize their earnings.
Married Filing Separately: Married couples who have a high earner, who may have hidden or surprise income, or couples with a spouse who owes back taxes to the IRS or a state.
If you’re single, you probably just have to file as single. Unless you’re raising a child, which might allow you to benefit from filing as Head of Household. However, married couples may find certain tax situations that could maximize their refunds by strategically choosing to file jointly or separately.
For married folks, typically you’ll pay more if you file separately than if you file jointly. That’s why Married Filing Jointly is the most popular tax filing status for married people. However, if you have an income-based student loan repayment plan that works off your adjusted gross income (ASGI), you could reduce your monthly bill if you aren’t basing it off your joint income. And high earners may want to file separately to allow their partner to gain access to deductions and tax credits that have income caps.
With the right moves and forethought, simply checking the box for your filing status can mean a difference of up to thousands of dollars.
Spoiler alert: The standard deduction is hard to top. But it’s not unbeatable.
Each year when you file your taxes, you have two options: You can itemize your deductions or take the standard deduction. The standard deduction basically makes taking a deduction much simpler by eliminating the nuance. Rather than making taxpayers nickel and dime their tax deductions, the IRS gives them an option to estimate their savings. And this makes for a pretty good deal for some taxpayers! But not everyone.
Blame (or thank) the 2017 Tax Cuts and Jobs Act, which raised the standard deduction to $12,000 while eliminating some historically deductible items from the equation. Some taxpayers gained access to a higher deduction than they might have otherwise. However, for those on the cusp, beating the standard deduction requires the kind of planning most taxpayers don’t have much interest in.
The higher your income, the more worth your while it becomes to make an attempt at itemizing your tax deductions. Big ticket deductions, like mortgage interest, retirement contributions, donations, and student loan interest can offer a solid path toward itemizing. But you may find a need to add in smaller deductions, like sales tax on your receipts at the grocery store.
It all comes down to effort. If you’re willing to put in the time—a few minutes here, an hour there—you may find that you can successfully itemize your deductions and save even more money. It just depends on whether you want to supercharge your tax refund.
Trying to set a record with your tax refund and pay for that summer vacation? Then you’d better not skip over tax credits. Tax credits provide a reliable vehicle to reaching your personal tax savings goals, as well as your goals for your tax refund. Indeed, for many middle and low-income taxpayers, they may offer the single greatest path towards tax savings.
Much like Baskin-Robbins, their are dozens of flavors of tax credits out there with their own appeals and purposes. (We could go for some ice cream now if you couldn’t tell.) But while some tax credits get plenty of attention, others fly just far enough below the radar that many tax filers completely miss them come tax season.
In order to supercharge your tax refund, you need to fully explore all your tax credit options. If you fall into certain groups, you have a bevy of tax credits at your disposal. Veterans, low income earners, families, teachers, and students make up just a few of the groups with access to money-saving tax credits.
For others, go to the experts. For example, we’ve written about a number of tax credits right on our blog (but you can always call us). Or go right to the IRS’s website and do a little research there!
While we’re on the topic of tax credits, we should mention that not all tax credits factor into your taxes equally. Of course, they all have different purposes, applications, and caps that will determine your eligibility and their impact. But more than this, all tax credits fall into one of two buckets. And learning the difference will make the difference on your tax refund.
Two types of tax refunds exist: refundable tax credits and non-refundable tax credits.
They both impact your tax bill in the same way, by reducing your overall tax obligation. So regardless of which tax credit you specifically take advantage of, the Child and Dependent Care Credit or the Lifetime Learning Credit, both will reduce the amount of taxes you owe to the IRS. The difference between refundable and non-refundable tax credits comes down to whether they’ll count toward your tax refund. Pretty straightforward, right?
Refundable tax credits can reduce the amount of taxes you owe past $0. Once you owe less than $0 in taxes to the IRS, that means they owe you money on your tax refund. So if you apply a refundable tax credit worth $500 to your $400 tax bill, it will result in a $100 tax refund.
Non-refundable tax credits will take you to $0, but not beyond that. So even if you utilize a refundable tax credit worth $500 on your $400 tax bill, it will result in a $0 tax bill—and no refund.
When some people think about saving for the future, it usually boils down to the basics. Maybe they decide for a rainy day fund, or they may save up for a house. Perhaps month by month, they put money into a certain stock or an index fund. But a funny thing happens when it comes to retirement savings: They want it to remain just that low-touch.
However, with retirement savings, you may not want to take that “low touch” approach. Because with the right moves, you can not only save for your Golden Years, but supercharge your tax refund right now.
We’ll focus on the IRA and 401(k) for the moment. When you contribute to your IRA, you can deduct those dollars directly on your tax return. Meanwhile, your 401(k) contributions come from pre-tax dollars, which lower the amount of taxable income you earn in a year—and your tax bill overall.
There exist several unique types of tax advantaged methods of saving for your retirement. And they go beyond a simple IRA and 401(k)! Some may help you save now, and some may help you save once it comes time to retire. You may not have access to all of them, and you may find that many of them don’t make the best fit for your financial situation.
But to maximize your tax refund now, you need to put the effort in when it comes to your retirement plan. It pays to save for your future. Literally.
It also pays to save for your healthcare. And doing so may help you lower your tax burden and actually boost your refund.
For some employed people, your employer may offer various savings accounts to help you pay for healthcare. The two we’ll cover here include the HSA and the FSA. HSAs, or Health Savings Accounts, in many ways function similarly to FSAs, or Flexible Spending Accounts. They both allow you to use your pre-tax dollars to cover health expenses, which lowers your overall taxable income. This alone has the potential to drop your overall tax bill and help you reach (or raise) your tax refund.
However, HSAs have an added benefit. With FSAs, if you don’t use your funds by the end of the year, you forfeit the money. With HSAs, you can hold onto that money and even invest it to help it grow further. But you can’t always take it with you—your employer may not want to maintain the account when it comes time for you to leave.
Nevertheless, you need to take your health savings into consideration when thinking about your tax refund. Not only will you have a well of savings for your health expenses, but you’ll lower your tax bill and boost your refund.
As you already know, you can count certain expenses as deductions when preparing your taxes. And that includes your interest payments on accounts like your mortgage or your student loans. But play your cards just right, and you can unlock more tax savings and supercharge your tax refund in the process.
For many taxpayers, paying a monthly mortgage bill or student loan payments is a fairly rote process. Perhaps you’ve turned on autopay, or you just wait until the bill comes in the mail and write a check or go online right then. But the end of the year offers a very special window of opportunity which you can use to save on taxes.
Since the IRS cutoff on most elements of your taxes falls on Jan. 1, if money permits, you can make an additional interest payment before the New Year. This way, you’ll have made another payment’s worth of interest on your mortgage or student loans. And it will come right back to you during tax season.
Give yourself a late present for the holidays by boosting your tax refund.
You can also give yourself the gift of a supercharged tax refund by timing your charitable giving! And the process works, essentially, the same—with a few differences.
Charitable contributions and donations come in all shapes and sizes. That monthly $5 you send to the ASPCA counts, just like donating a used vehicle or writing a big check at a fundraiser count. But for your taxes, timing is everything. So let’s walk through a couple of ways you can use it to your advantage.
Some savvy taxpayers opt to make donations in bulk every other year, which can help them in their quest to itemize their deductions. And for large deductions, careful timing can result in a maximized deduction and minimized out-of-pocket costs.
But timing doesn’t just refer to a date on a calendar; it can also reference the year-over-year tax benefits of your donations. For example, if you’ve hit the maximum percentage of taxable income that can apply to your deductions, you can carry your deductions forward for up to five years. If you’re at risk of losing some of your balance because you’re about to hit the cap, hold off on some of your donations until the following year.
This way, you’ll continue to benefit from the tax carryover on your sizable donation a few years back. And you won’t sacrifice any of the tax benefits you’ll gain from your charitable donations now. This will help you maintain a healthy tax refund for years to come.
It may not seem like the flashiest way of maximizing your tax refund, but we’d be remiss not to mention it. You simply have to file your tax return on time—and report your income when you do it. Here’s why.
When you file your taxes late (or not at all), you don’t necessarily lose your tax refund. In fact, if the IRS owes you money, filing late doesn’t really have an impact on you in terms of penalties or interest. Tax penalties and interest typically accrue based on your total tax bill, so if your tax bill sits at a big, fat zero. Well, we can do the math, but 0% of $0 equals $0. The real issue comes when you don’t file at all, because you have no way of accessing your tax return. Wait too long, and you’ll lose your tax refund entirely.
You must also report all your income. When you don’t, you run the risk of an audit now or in the future that may lead you to owe a serious chunk of change. This won’t just seriously reduce your tax refund, but it might eliminate it entirely. And the last place you want to be is on the IRS’s bad side.
We could go on and on with big and small tips to help you maximize your tax refund. We could probably fill up a small book with them! (Maybe we should.) But our point here is this: If you really want to maximize your tax refund, you shouldn’t go it alone. Getting help from a tax expert can help you reach the tax refund you want.
An expert tax preparation company will help you in a few ways. Initially, they’ll know the ins and outs of the federal and state tax codes where you live. This will help you access the best credits and deductions where you live. Next, a tax prep service will understand the recent changes to tax law, which is a common place taxpayers miss out on extra tax savings. Finally, a good tax prep service will help you even after you file. So in the instance the IRS ends up auditing you, you won’t have to go it alone. A successfully defended tax audit can help you keep your hands on some of your tax refund you might lose otherwise.
An expert tax prep service will do more than just help you itemize your deductions. They provide holistic support for your tax return and give you the peace of mind that can only come when you put your taxes in trusted hands.
When it comes right down to it, it doesn’t take that much to supercharge your tax refund. It takes focus and organization, as well as a commitment to learning. And that’s where we come in.
Maybe you’re looking for more tips—or you read this and thought: Welp, not for me! We’re here to help. You should go into tax season with confidence, one way or another. And if you choose to put your confidence in us, we’ll always make sure to earn it. We hope that these 10 expert tips to supercharge your tax refund help you to do just that.
With the right care, you can reduce your tax bill, boost your tax refund, and come out on the other side of tax season happy. And don’t you deserve that?
Looking to maximize your tax refund today? We’re here to help. Give us a call at 1-800-410-8605 or send us a message today and we’ll get your tax filing process started to get you the best tax refund possible.