Filing taxes may not be the highlight of the year, but it’s the perfect opportunity to put some money back in your pocket. With a little preparation and strategy, you can increase your chances of receiving a larger tax refund.
This guide offers key steps to ensure no dollar is left behind when you file your taxes.
Gather All the Essentials before Getting Started
Preparation is the foundation of a smooth tax filing process. Before you sit down to file, ensure you have all the necessary documents ready. These aren’t just the obvious ones like income statements. Any records tied to deductible expenses or potential credits are equally important.
Here’s a checklist to keep handy:
- Your Social Security number; plus numbers for any dependents
- W-2s, 1099s, and other income statements
- Records of deductible expenses, such as medical bills or charitable donations
- Receipts for educational costs, childcare expenses, or business-related expenditures
Having these documents ready ensures you won’t miss any refund-boosting opportunities hidden in the details.
Leverage Tax Deductions to Your Advantage
Tax deductions can reduce the income you’re taxed on, which could mean a larger refund for you. While it may seem overwhelming to figure out what you qualify for, taking the time to explore common deductions can really pay off.
For instance, if you paid for student loan interest, medical expenses, or donated to a nonprofit, those costs might be deductible. Certain work-related expenses or home improvements may also qualify. But eligibility often depends on your filing status and income.
When tracking deductions, organization is crucial. Categorize your expenses throughout the year into folders or digital spreadsheets.
Are You Wondering Why Your Federal Refund Feels Smaller?
Many taxpayers are surprised when their refunds don’t meet expectations and may wonder why their federal refund is so low. If this is what you may be thinking, you can read more about why is my federal refund so low. Several factors could be shrinking your refund, many of which are tied to changes in tax laws or withholding adjustments at work.
TurboTax has a detailed guide written on why your federal refund might so low despite meeting all the criteria. There are several factors for this including:
- Did you receive unemployment benefits? These are taxable in many cases.
- Did you claim fewer deductions during the year through your employer? That might mean less was withheld from your paychecks.
- Certain tax credits may now phase out after a specific income level, which can impact total refunds.
Tax Credits That Could Maximize Your Return
Unlike deductions, tax credits directly reduce the amount of tax you owe. They can be a great way to reduce your bill and, in some cases, leave you with extra money coming back.
Here are some credits to explore this year:
- Earned Income Tax Credit (EITC): Designed for lower-income individuals, this credit can lead to a significant refund boost.
- Child Tax Credit: If you have children, this one is a must-check. It offers substantial financial relief.
- Education Credits: Spent money on schooling or professional development courses? This might be for you.
Be aware that some credits are refundable, meaning they could boost your refund even if they exceed the taxes you owe.
Double-Check Your Return
Before you hit submit, take time to comb through your return for accuracy. Errors, even small ones, can lead to delays or discrepancies that cost you time and frustration.
Here’s what to check closely:
- Ensure all personal information, like Social Security numbers, matches your files.
- Double-check math and figures, particularly for deductions and credits.
- Confirm all necessary forms are included. Missing one can raise red flags or slow refund processing.
