Get a Bigger 2024 Tax Refund in 5 Ways — Experts Explain How
Preparing your taxes can be cumbersome, and the prospect of owing money can make it even more stressful.
Yet, some experts said there are ways to not only get a refund money owed to you if you overpaid – but also boost the amount you could receive, making the planning process worthwhile.
In 2023, the average refund amount was $2,753, down from $3,012 in 2022, a whopping 8.6% decrease, according to the Internal Revenue Service (IRS).
The filing deadline for filing federal income tax 2023 is April 15, 2024, and the IRS typically starts accepting tax returns in mid to late January each year.
“Remember, filing your taxes early can help you to receive your refund earlier,” said Christian Simmons, certified educator in personal finance and financial writer for Annuity.org.
Here are some steps worth taking a look at to try to get a bigger refund.
Check Your Filing Status
Your filing status can greatly impact how much of a refund you are in for, but remember that you only have so much leeway here, said Simmons.
“If you are single, for example, then your filing status options are limited,” he said. “It’s not like you can pick whichever status would result in the biggest refund.”
Simmons added that there are other situations where you may have to do some thinking to determine your filing status, for instance, deciding whether or not to file jointly with your spouse.
“Your financial situations may be very different, and you may opt to file separately,” he said, adding that filing jointly provides access to many breaks that may help you earn a bigger refund in 2024.
The IRS has five options: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child.
Each of these filing statuses has its tax brackets, and understanding how tax brackets work and which bracket your income falls into can be helpful in your overall personal finance strategy, added Simmons.
Itemizing or Taking a Standard Deduction?
The standard deduction is a specific dollar amount that reduces the amount of income you’re taxed, the IRS explains, lowering your taxes.
The preset amount depends on your filing status: single, head of household, jointly or married, filing separately, and your age and/or if you’re blind. Generally, it is adjusted each year for inflation.
Yet, a GOBankingRates survey found that 90% of Americans need to learn the exact tax deduction, making that decision potentially complicated.
According to Simmons, the standard deduction knocks a decent chunk of taxable income, and it’s the better deal for most taxpayers.
“Keep in mind, you may also not be eligible for a standard deduction in some circumstances,” he added.
It’s also worth examining whether an itemized deduction, where you deduct individually for charitable contributions or medical expenses, could save you more money than opting for the simpler standard deduction.
“Itemizing typically can only truly be taken advantage of for significant gain by some people and also requires much more tracking of your finances and spending to pull off,” he said.
Maximize Retirement Contribution
Simmons added that maximizing retirement contributions is another way to boost your tax refund while saving money long-term.
“Saving for retirement is obviously a huge perk in itself, but there are tax advantages as well,” he said. “A 401(k), for example, is tax-deferred. So you don’t pay taxes on that money until you make withdrawals. The money you place into your 401(k) or IRA this year can strongly impact your taxes by lowering your adjusted gross income. It’s a double whammy of saving effectively for your future retirement while benefiting your current tax situation.”
Apply All Available Credits
In addition to the most well-known credits, such as claiming dependents, there are other less common credits you may qualify for.
“Some people have had the experience of, when they applied for college, looking up and applying for all sorts of obscure and small scholarships for which they may fit the requirement. Looking for tax credits can be similar,” said Simmons.
For instance, he said that if you’ve made home improvements to reduce your carbon footprint, you may be eligible for the residential energy property credit.
In addition, workers with low to moderate income and families may qualify for the earned income tax credit (EITC).
“And if you or your spouse went back to school this year, you may be able to save some money with the lifetime learning credit,” he added.
Ask a Professional
According to Simmons, there are several potential benefits to working with a professional.
“At the end of the day, taxes are an incredibly complicated subject and they can easily become overwhelming for everyday people,” he said.
In turn, a professional helps take some of that stress off, but they also can help you find ideal situations and deductions you probably wouldn’t be able to identify on your own.”
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