A tax refund typically represents the amount of money you overpaid in taxes over the course of the previous year. If your W-2 indicates you paid too much in both federal and state taxes, you are owed a refund from both. Certain government tax credits also may make you eligible for a refund. A number of steps can increase the amount of that check. Tactics include listing all your eligible deductions and having your employer withhold a larger amount throughout the year.
Have more money taken out of your paycheck for taxes. This leaves you in position for a bigger refund and makes it more likely you won't owe the IRS money at the end of the year.
Fill out a new W-4 with your employer to have more money withdrawn. You also can have extra money taken out of government checks like Social Security and unemployment checks by filling out a new W-4V.
Withhold taxes from investment payouts, like those from annuities, pensions or whole life insurance. A W-4P filed with the payer can up those withholdings to give you a bigger refund.
Claim All Your Deductions
Save receipts from medical bills. For example, as of 2015, you can deduct medical and dental expenses for you and your family that exceed 10 percent of your adjusted gross income. So if you made $50,000, you can deduct those expenses you paid that exceeded $5,000.
Deduct all the charitable donations you've made. Donations to 501(c)3 organizations are allowable. Ask for receipts to prove your donations in case of an IRS audit. Additionally, mileage while performing community service and volunteer work is deductible, and often can pay off in larger tax refunds.
Take deductions for personal property tax, state and local income taxes, car and boat registrations, mortgage interest and pre-paid interest, and tax preparation fees.
Take Qualified Tax Credits
Use tax credits, which are government incentives that can reduce your tax burden and boost your refund whether you itemize or not.
Claim the Earned Income Credit if your gross income was less than $49,078. The amount is based on the number of children you have, your age and income.
Apply for a credit for child care or money you put into a retirement fund if you meet IRS guidelines.
Time Payments Strategically
Time certain payments such as mortgage and estimated taxes, to maximize your refund. For example, pay your January mortgage payment in December to claim the interest on it as a tax deduction for the current tax year. Keep in mind, however, that you'll have one less monthly deduction for next year's taxes.
Get medical and dental treatments performed before the end of the year to increase the medical deduction. Send contributions to 501(c)3 organizations in December as well to boost your final deduction and increase your refund.
Talk to your accountant about the timing of future payments to boost your refund in coming years. The timing of payments need to be evaluated in advance.
Ask your tax preparation person to evaluate the benefits of itemizing versus taking a standard deduction because the standard deduction changes from year to year.
Pay estimated taxes if you are self-employed or else you could owe money to the government when you file your taxes.
Keep in mind that when you receive a bigger refund, you also effectively give the government an interest-free loan for the time they hold your money.
Things You'll Need
New W-4 form
- IRS.gov: Four Tax Credits that Can Boost Your Tax Refund
- Turbo Tax: What Is a Tax Refund?
- Tax Act: How to Avoid Owing Money to the IRS
- U.S. News and World Report: 8 Ways to Boost Your Tax Refund with Itemized Deductions
- Internal Revenue Service: Itemized Medical Deductions
- Turbo Tax: 5 Hidden Ways to Boost Your Tax Refund