How to Get Max Refund on Taxes: Tips to Boost Your Tax Return

A larger tax refund means more money in your pocket, but achieving this requires careful planning and awareness of available tax benefits. Many taxpayers miss out on deductions and credits simply because they don’t know they qualify. Small adjustments to how you file can make a significant difference in your refund.

Reviewing Your Withholding

The amount of tax withheld from your paycheck affects whether you receive a refund or owe money when filing. If too little is withheld, you could face an unexpected tax bill; if too much is withheld, you’re giving the government an interest-free loan. Adjusting your W-4 form helps maintain the right balance and prevents surprises at tax time.

The IRS provides a Tax Withholding Estimator to determine whether your current withholding aligns with your expected tax liability. Life changes such as marriage, having a child, or taking on a second job can shift your tax situation, making it necessary to update your W-4. For example, getting married may change your tax bracket, affecting how much should be withheld.

Non-wage income, such as bonuses and freelance earnings, also impacts tax liability. Bonuses may be subject to a flat 22% federal withholding rate, which may not be enough if you’re in a higher tax bracket. Self-employment income requires estimated tax payments to avoid penalties. If you earn significant non-wage income, adjusting your W-4 to withhold extra tax can prevent a large bill in April.

Optimizing Filing Status

Selecting the right filing status can affect how much tax you owe or the size of your refund. The IRS recognizes five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Surviving Spouse. Each has different tax brackets, standard deductions, and eligibility for certain benefits.

For married couples, filing jointly often results in lower tax rates and access to credits like the Child Tax Credit. However, filing separately may be beneficial in certain cases. For instance, if one spouse has high medical expenses, the 7.5% adjusted gross income (AGI) threshold for deducting medical costs may be easier to meet when reporting income separately. Additionally, if one spouse has significant student loan debt under an income-driven repayment plan, filing separately might reduce monthly payments.

Head of Household status provides a larger standard deduction and lower tax rates than filing as Single, but strict requirements apply. You must be unmarried or considered unmarried, have paid more than half the cost of maintaining a home, and have a qualifying dependent. Many filers mistakenly assume they qualify when they do not, leading to IRS audits or penalties. Ensuring you meet all conditions before claiming this status is essential.

Claiming Eligible Credits

Tax credits directly reduce the amount of tax owed and can provide a greater benefit than deductions, which only lower taxable income. Some credits are even refundable, meaning they can increase your refund beyond what you paid in taxes.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) assists low- to moderate-income workers by reducing their tax burden and, in many cases, providing a refund. Eligibility depends on income, filing status, and the number of qualifying children. For the 2023 tax year, the maximum credit ranges from $600 for filers without children to $7,430 for those with three or more qualifying dependents.

To qualify, earned income—such as wages, salaries, or self-employment earnings—must fall below specific thresholds. For example, a married couple filing jointly with three children must have an adjusted gross income (AGI) below $63,398 to claim the credit. Investment income must also remain under $11,000. Many eligible taxpayers miss out on the EITC because they assume they don’t qualify, particularly those without children or those who experienced a temporary drop in income.

The IRS allows filers to use prior-year income if it results in a higher credit, which can be beneficial for those who had reduced earnings due to job loss or reduced hours. Claiming the EITC requires filing a tax return, even if no tax is owed, and errors in claiming it can lead to audits or delays in processing refunds.

Education Credits

Taxpayers who paid for higher education expenses may qualify for the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC). The AOTC provides up to $2,500 per eligible student for the first four years of postsecondary education, with 40% of the credit (up to $1,000) being refundable. To claim the full amount, the student must be enrolled at least half-time and have qualified expenses such as tuition, fees, and course materials.

The LLC offers a credit of up to $2,000 per tax return for tuition and fees at eligible institutions, with no limit on the number of years it can be claimed. Unlike the AOTC, the LLC is nonrefundable, meaning it can reduce tax liability to zero but won’t generate a refund.

Both credits have income phaseouts. For 2023, the AOTC begins to phase out for single filers with a modified adjusted gross income (MAGI) above $80,000 ($160,000 for joint filers), while the LLC phases out at $80,000 ($160,000 for joint filers). Taxpayers cannot claim both credits for the same student in the same year, so selecting the one that provides the greatest benefit is important.

Child and Dependent Care Credit

Parents and caregivers who pay for childcare or dependent care services to work or look for work may qualify for the Child and Dependent Care Credit. This credit covers a percentage of eligible expenses, with the maximum credit amount depending on income and the number of dependents.

For 2023, taxpayers can claim up to 35% of $3,000 in expenses for one qualifying dependent or $6,000 for two or more, resulting in a maximum credit of $1,050 or $2,100, respectively. The percentage gradually decreases for those with AGI above $15,000, bottoming out at 20% for incomes above $43,000. Unlike the Child Tax Credit, this credit is nonrefundable, meaning it can only reduce tax liability to zero.

Eligible expenses include daycare, preschool, summer camps, and in-home care, but payments to a spouse or another dependent do not qualify. To claim the credit, taxpayers must provide the care provider’s name, address, and taxpayer identification number (TIN) on their return.

Maximizing Itemized Deductions

Itemizing deductions can reduce taxable income beyond what the standard deduction allows, but determining whether it’s beneficial requires careful evaluation. The Tax Cuts and Jobs Act of 2017 significantly increased the standard deduction—set at $13,850 for single filers and $27,700 for married couples filing jointly in 2023—making itemizing advantageous primarily for those with substantial deductible expenses.

Mortgage interest is one of the most significant deductions available, applying to interest paid on loans up to $750,000 for homes purchased after December 15, 2017. Property taxes and state and local income or sales taxes are also deductible, though they are capped at a combined total of $10,000.

Medical expenses exceeding 7.5% of adjusted gross income can be deducted, but only qualified out-of-pocket costs count. These include payments for doctor visits, prescriptions, and long-term care insurance premiums.

Charitable donations are deductible up to 60% of AGI for cash contributions to qualified organizations. Donating stock instead of selling it can be particularly advantageous, as it allows taxpayers to deduct the full fair market value while avoiding capital gains taxes.

Contributing to Retirement Accounts

Retirement contributions not only help secure long-term financial stability but also provide immediate tax benefits. Contributions to tax-advantaged accounts such as 401(k)s and IRAs can lower taxable income. The IRS sets annual contribution limits, which for 2023 are $22,500 for 401(k) plans and $6,500 for traditional and Roth IRAs, with additional catch-up contributions for those aged 50 and older.

Maintaining Accurate Records

Keeping thorough financial records ensures all eligible expenses and credits are claimed while reducing the risk of errors that could trigger audits. Taxpayers should maintain receipts, bank statements, and other supporting documents for at least three years. Digital tools and tax software can simplify recordkeeping by categorizing expenses and tracking deductible items throughout the year.