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10 Tips for Boosting Your Tax Refund

7 minute read

By WalletGenius Staff

It’s safe to say there’s not a taxpayer in the United States who doesn’t want to get a tax refund from Uncle Sam. Most people do it the old-fashioned way: They prepare their income tax returns, send them to the IRS and wait for the government to cut a check.

Others, however, are a bit extreme.

Consider that in July 2014 an Alabama jury found Nina Macena, of Dothan, Alabama, guilty of conspiring to defraud the government by filing bogus tax returns to claim more than $300,000 in refunds. She also got nabbed for three counts of wire fraud and three counts of aggravated identity theft. Macena apparently gave Ivory Bolen (also from Dothan) the stolen identities, which the pair then used to file the fraudulent returns [sources: U.S. DOJFBI].

Then there’s the case of Brigitte Jackson, a Georgia woman whom authorities arrested for trying to cash a fake state tax refund check for, gulp, more than $94 million. According to police, Jackson claimed $99 million in wages on a fake tax return, which she then used as the basis for collecting the $94 million refund. The state, sensing something amiss, cut her a check for $94,323,148 and then told her to go to the bank to cash it. As she was about to cash the check, the police swooped in and nabbed her for theft and conspiracy to defraud [source: Hastings].

You don’t have to resort to such fraudulent techniques to increase the amount of money the government returns to you each tax season. Avoiding them will help you avoid a tax audit and all you have to do is follow these 10 simple tips to get the bigger tax return.

10. Reconsider Filing Status (if You’re Married)

Every year, many married couples decide to file a joint tax return, but in some cases that may not be a wise financial decision. Like many things related to income tax filing, it all depends on your circumstances. For one thing, a couple earning similar incomes and filing jointly may get nudged into a higher tax bracket.

Filing separately can boost a refund if one of the spouses has a lot of medical bills or other expenses that may be tax deductible. Deducting those expenses will allow the spouse to lower their adjusted gross income, which means he or she will be getting back more money during refund time. In addition to out-of-pocket medical bills, other expenses, such as those for business travel, can be deducted.

On the other hand, filing separately could mean the loss or reduction of various tax credits, such as the child-tax credit.

If you’re not sure, run the numbers both ways – or have your tax preparer or tax software do it for you. You’ll be glad you did.

9. Get Crazy With (IRA) Contributions

Maximizing a retirement account contribution can also reduce your taxable income. What’s great is that the IRS gives taxpayers until April 15 to claim any IRA contributions. You even have until Tax Day to set up a retirement account (although we wouldn’t advise waiting until the very last minute). For the 2020 and 2021 tax years, the IRS will allow you to contribute up to $6,00 into your IRA. The amount rises to $7,000 if you’re older than 50 (those limits apply to both Roth and traditional IRAs). However, rolling over money from one retirement account to another does not count. Moreover, the amount of the deduction is limited if you have a work-related retirement plan or you make too much money [sources: IRSIRS].

If you have a Roth 401(k), it will have no impact on your taxable income because you are using after-tax dollars to contribute to the account.

8. Pay Attention to the Calendar

Here’s something I’m doing this year. I’m paying January’s mortgage payment before Dec. 31, which will allow me to deduct the additional interest from my 2014 tax return. My bank makes it easy because I take part in its mortgage accelerator program. I pay half the mortgage every other Friday. In essence, I’m always one month ahead so at the end of the year I’m making an extra payment. You don’t have to do what I do, however. If you can afford it, you can make that extra payment in December yourself and it will have the same impact on your taxes. It will also help you shave off a few years on the life off the loan. In my situation, I reduced my loan payments by three years.

The point is that when it comes to taxes, watching the calendar is everything and can result in more green for you. Paying property taxes, scheduling medical treatments in the last quarter or paying state estimated taxes in December, allows you to itemize and maximize your deductions, which reduces your taxable income.

7. Claim the Earned Income Tax Credit

The earned income tax credit helps those living on low- or moderate-incomes to reduce the taxes they owe. This credit carries extra value for those who have low- or moderate-incomes, as well as have children. Most tax credits are nonrefundable. That means if you’re on the hook for $1,000, but qualify for a $1,500 credit, the $1,000 tax bill is erased but you’ll never see the $500. This credit, however, allows you to get that $500 back as part of your refund. Pretty cool, eh?

In 2019, 25 million individuals and families took advantage of the EITC, receiving some $63 billion. In 2020, the maximum EITC was $538 with no qualifying children; $3,584 with one qualifying child; $5,920 with two qualifying children and $6,660 with three or more qualifying children. The average payout in 2019 was $2,476. Not everyone is eligible for the max, but you get the idea. Just go over the rules before you file [sources: IRSIRSBell].

6. Itemize Deductions

To itemize or not to itemize? That is the question. The rule of thumb, according to those in the know, is to figure out whether itemizing home mortgage interest, home refinance expenses, state income taxes, state property taxes, medical expenses and the like will total more than the standard deduction. For 2020 taxes, the standard deduction is $12,400 for a single filer; $24,800 for a joint return and $18,650 for a head of household [sources: IRS].

According to the IRS, you may benefit from itemizing if any of the following circumstances apply to you:

  • You cannot use the standard deduction.
  • You racked up pricy uninsured medical and dental expenses.
  • You paid interest or taxes on your mortgage.
  • Your employee business expenses were unreimbursed.
  • You gave money to charities.

5. Increase Withholding

In theory, the more money you make, the more taxes you’re likely to owe. As any teenager or adult who’s held a job in the United States knows, the amount of taxes withheld from each paycheck is determined when you fill out a W-4 form. It’s simple: The more estimated deductions you claim, the less money your employer deducts for taxes. You inform your employer of your filing status, your spouse’s income (though, only for determining if you and your spouse have comparable earnings, which can affect how much you withhold), and any deductions you plan to claim for the year if not solely claiming the standard deduction.

If you state you will have a lower amount of deductions, the government will take a bigger bite out of your check and return that money to you after you file in the form of a refund. To change your withholding, go to your human resources department and ask them to modify your W-4 form. Remember, you might owe Uncle Sam if your employer does not take out enough in taxes.

4. Keep Up With the Tax Code

Trying to keep up with the tax code is like trying to keep up with the Kardashians. It’s mind-numbing. The federal government has its own tax code, as does every city, state, county and town that imposes taxes. The federal tax code is the ultimate authority when filing your taxes.

The IRS tries to make it easy to keep abreast of the rules by publishing instructions with your federal income tax forms. Reading and understanding what you can deduct can help you boost your tax refund. In addition, tax prep software is updated every year to make sure it’s in line with current IRS guidelines just in case you’re not.

3. Hire a Professional Accountant

Knowing the ins and outs of tax preparation can affect whether you get a refund or have to pay. The best thing to do is hire a professional. You can go to a commercial tax preparation company and have them do the math for you, or you can do what I do and hire an accountant who is a tax specialist.

To find one, ask a friend or someone else for a referral. Do it before tax season. Interview candidates. Ask them if they’ll take you on, how much they charge, and whether they will figure out the taxes themselves or give it to an underling. Also, ask them whether they will represent you if the IRS knocks on your door. If they say no, go find someone else [source: Huddleson].

2. Deduct Health Insurance Premiums

Are you self-employed? If you answered “yes,” then you may be able to deduct medical and dental health care premiums for yourself, your spouse and your dependents, and you don’t even have to itemize your deductions to be eligible. Because of the way medical expenses are treated, it will lower your adjusted gross income and thereby reduce your tax payment or increase your refund.

Do note, however, that you can’t deduct the premiums when determining your self-employment taxes. Moreover, you can only deduct the premiums for those months that you, or your spouse, did not participate in (or have access to) an employer-sponsored health plan. You also can snag the deduction if you pay health insurance premiums to your employees. Lastly, you’re not allowed to claim the deduction if it exceeds the income from your business [source: TurboTax].

1. Don’t Forget the Alimony

Alimony. Enough said. You can subtract from your income tax the amount you pay to your former spouse. However, you cannot deduct child support payments; noncash property settlements; payments that represent your spouse’s portion of community property; money used to maintain the property or use of the property. Concurrently, you also have to claim the income from alimony [source: IRS].

[Editor’s Note: Recent tax reform means that subtracting alimony is no longer allowed. Instead, consider claiming the child tax credit or investing in something like solar panels for your house to claim the investment tax credit.]

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WalletGenius Staff


This article was worked on by a number of the WalletGenius staff, including freelancers, full-time writers, and editors.


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