How to Get More Back on Taxes: Tips to Maximize Your Refund

Maximizing your tax refund can significantly impact your personal finances. Strategic planning and understanding your options, including deductions, credits, and other financial strategies, are essential to increasing the amount you receive back from the IRS.

Filing Status Choices

Selecting the right filing status is a fundamental step in optimizing your tax refund. The IRS recognizes five primary filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) with Dependent Child. Each status has unique tax brackets, standard deductions, and eligibility for certain credits. For example, Married Filing Jointly often provides favorable tax rates and a high standard deduction of $27,700 for 2024. It also unlocks eligibility for credits such as the Earned Income Tax Credit (EITC), which can significantly increase your refund. However, Married Filing Separately may be advantageous if one spouse has substantial medical expenses or deductions exceeding 7.5% of their adjusted gross income (AGI).

Head of Household status offers a higher standard deduction of $20,800 for 2024 and more favorable tax brackets than Single status. To qualify, you must be unmarried, pay over half the cost of maintaining a home, and have a qualifying dependent. This status is particularly beneficial for single parents or those supporting dependents.

Tallying Eligible Deductions

Eligible deductions can reduce your taxable income, lowering the tax you owe. The state and local taxes (SALT) deduction allows taxpayers to deduct up to $10,000 of combined property, income, and sales taxes. For homeowners, the mortgage interest deduction is valuable, though it is capped at interest paid on mortgage debt up to $750,000 for loans taken after December 15, 2017.

Charitable contributions are another avenue for deductions. Taxpayers can deduct cash donations up to 60% of their AGI, while non-cash contributions have different limits. For example, appreciated securities can be deducted up to 30% of AGI. Maintaining proper documentation, such as receipts, is crucial to substantiate these deductions.

Exploring Tax Credits

Tax credits directly reduce your tax liability dollar-for-dollar. The Child Tax Credit (CTC) provides up to $3,000 per qualifying child aged 6 to 17 and $3,600 for children under 6 in 2024. The credit is fully refundable, meaning you can receive the full amount even if it exceeds your tax liability. Phase-outs begin at $200,000 for single filers and $400,000 for joint filers.

The American Opportunity Tax Credit (AOTC) offers up to $2,500 per eligible student for higher education expenses, with 40% refundable. To qualify, students must be enrolled at least half-time in a program leading to a degree or recognized credential. The credit phases out for modified adjusted gross incomes above $80,000 for single filers and $160,000 for joint filers.

For energy efficiency improvements, the Residential Energy Efficient Property Credit covers 26% of the cost of qualified installations, such as solar panels. Ensure that installations meet IRS criteria to qualify.

Reviewing Withholding

Reviewing your withholding ensures the correct amount is taken from your paycheck, helping you avoid owing taxes or overpaying. The IRS Tax Withholding Estimator can help fine-tune your withholding to match your tax liability.

When updating your Form W-4, consider changes in marital status, the birth of a child, or income adjustments, as these factors impact withholding. The 2020 revision of Form W-4 eliminated allowances, requiring a more detailed approach to ensure accuracy.

Periodic reviews are recommended, especially after life events that alter your tax situation. Keeping your withholding level appropriate can help you avoid underpayment penalties, which may apply if you owe more than $1,000 in taxes or fail to pay at least 90% of your current year’s tax liability.

Considering Retirement Contributions

Contributing to retirement accounts can reduce your taxable income while providing long-term financial benefits. For 2024, 401(k) contribution limits are $23,000 for those under 50 and $30,500 for individuals aged 50 and older, including catch-up contributions. Contributions to Traditional IRAs are deductible, with limits of $6,500 for those under 50 and $7,500 for individuals 50 and older. Deduction eligibility phases out at certain income levels if you or your spouse are covered by a workplace retirement plan.

Roth IRAs, while not offering immediate deductions, provide tax-free growth and withdrawals in retirement. Income limits for Roth contributions phase out starting at $138,000 for single filers and $218,000 for joint filers. Balancing contributions between Traditional and Roth accounts can diversify your tax strategy.

Healthcare and Medical Expense Deductions

Medical expenses exceeding 7.5% of your AGI can be deducted. Eligible expenses include payments to doctors, dentists, prescription medications, medical equipment, and transportation costs for medical care. Insurance premiums not reimbursed by an employer may also qualify. Accurate documentation, such as receipts and statements, is essential for claiming these deductions.

Health Savings Accounts (HSAs) provide additional tax-saving opportunities. Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free. For 2024, contribution limits are $3,850 for individuals and $7,750 for families, with an additional $1,000 catch-up contribution for those aged 55 and older.