Maximize your return
You took a deep breath, gathered your tax information and documents, selected a method of filing and now you’re ready to get it done. Great!
But let’s not forget, filing your taxes isn’t just a legal requirement—it’s also a process which will likely deliver you a “tax refund”—or check—once the process is over. You definitely want a refund, but how much can you expect to get back? Well, that depends on you and how you file.
If you want to maximize your tax refund (and, let’s be honest, who doesn’t?), then follow these steps to make sure you’re getting the most from your tax refund check. Leave no dollar behind!
1. Increase withholding throughout the year: Here’s something you can do all year long to get a bigger refund check after you file. Whenever you take a new job, you’ll be asked to fill out a W-4 form. The way you fill this out will determine how many allowances (for yourself and your family), you’ll claim. (An allowance is an amount deducted from your taxable income). When you fill this out, drop an allowance to withhold more income. It will increase the amount held from each paycheck (which will mean smaller paychecks throughout the year) but potentially a much larger tax refund in the spring.25 You can use a withholding calculator to determine which allowances to claim.
2. Choose to itemize instead of accepting the standard deduction: The standard IRS deduction ($6,300 for singles, $12,600 for married couples filing jointly) will lower your taxes. But selecting to itemize your deductions will likely increase your tax refund. When you choose to itemize, look for items like job search expenses, unreimbursed business expenses and more to increase your refund.26
3. Understand exemptions and deductions. Speaking of itemizing your deductions, there are a surprising number of items you might not know that you are eligible for. For instance, you can deduct the costs associated with childcare, elderly parent care, even friends you are financially supporting (though we don’t recommend financially supporting your friends). Especially in the case of supporting elderly parents, they must receive more than half of their financial support from you.27
4. Be charitable. Here’s an easy one: give stuff away! Whether it’s clothes, food or even big-ticket items like electronics and vehicles, when you give to qualified charities, those charitable gifts are tax deductible—making you eligible for a larger refund! You get to feel good and collect a bigger refund. Win!28
5. Deduct your home office expenses. Do you work from home? Do you have a home office? If so, those home office expenses can be deducted! Here’s how:
- The IRS offers two methods of calculating home office expenses: The Standard Method and the Actual Method.
- With the standard method, you can deduct auto mileage with the following formula: 57.5 cents per business mile plus parking and tolls. You can calculate the expense of a home office at $5 per square foot (at a maximum of 300 per square feet).
- The Actual Method is a bit more detail oriented, but it could result in a somewhat higher tax refund.
- Using the actual method, for auto-related expenses, add up all your car expenses (including gas, maintenance, and insurance) and then multiply by your business percentage (business miles divided by total miles for the year).
- For example, $10,000 in vehicle expenses / 25,000 miles driven in 2016=.40. Take that percent and multiply it by the amount of relevant expenses you had that year ($10,000), so: $10,00 x .40= $4,000.29
Calculate your home office deduction using the Actual Method by adding your home expenses and multiplying it by your home office square footage divided by total home square footage.30
6. Deduct medical expenses and use a Flexible Spending Account (FSA) for medical costs. Did you know you can deduct unreimbursed medical and dental expenses? And not only that, but also the mileage to and from your care.31 It’s true! So get that nagging toothache checked out, your mouth—and your wallet—will thank you.
8. Contribute to a 401K—When you pay into a 401K, those payments are “shielded”, meaning you can deduct those payments from your taxable income. Double win! You pay more into your retirement and stand to receive a larger tax refund.
9. Talk to a pro—When you do your taxes, you want to make sure you’re doing them right and getting back the most cash you can. After all, you worked hard for that money. If you’re worried that you’re leaving money on the table, it might be worth it to speak with a professional. They aren’t free, but you’ll get peace of mind that you wouldn’t otherwise.
Table of Contents:
- Taxes: the basics
- How do taxes work anyway?
- Step 1: Preparing to File
- Step 2: Select your method of filing
- Step 3: Filing & receiving your tax return
- Glossary of terms you may encounter
- Tax FAQs
- About the experts
- Works Cited