Tips To Increase Your Tax Refund

Are you anticipating a tax refund this year? Although filing taxes can be difficult, you can take some extra steps when you file to help maximize your tax refund. From choosing the right filing status to maximizing deductions and credits, you can increase your tax refund in several ways.

Reviewing all aspects of your tax filing and considering all your options before filing is a good idea. In order to maximize your tax return, it might be helpful to calculate your tax return in multiple different ways to find out what gets you the highest tax return.

Get your tax return directly deposited into your Arkansas Federal Credit Union bank account to get access to your tax return faster. You can open an account today if you don’t have an Arkansas Federal account.

What Is The Maximum Tax Refund You Can Get?

There is no one-size-fits-all answer when it comes to what the highest tax refund is. The amount of your tax refund depends on a variety of factors, including your income, filing status, and if you have dependents. In some cases, choosing certain options can increase your tax refund.

Working with a qualified tax professional to help you decide which methods to use to maximize your tax refund can help you better understand your options. There are benefits and downsides to each different way you could maximize your refund. Taking your personal financial goals into account when making decisions can help you decide which methods are best for you.

How To Get A Bigger Tax Refund

There are a lot of different factors that affect the size of your tax refund. It might be more difficult to get a bigger tax refund with no dependents, but that doesn’t mean that it’s not possible.

Choose The Right Filing Status

How you file can impact the size of your tax refund. If you’re married, depending on your financial situation, filing separately could offer you savings. For example, if one spouse has a lot of medical expenses, filing separately could allow for a larger deduction. If you don’t have dependents, choosing to file separately is typically most useful. 

Filing separately does risk losing your eligibility for certain deductions or tax credits. Both spouses must take either the standard or itemized deductions when filing separately. The best way to decide how to file is to calculate your deductions and tax refund with both filing statuses.

If you’re unmarried but have a qualifying dependent, you could decrease your tax bill by filing as a head of household. Being a head of household gives you a higher standard tax deduction and can give you a more favorable tax bracket than filing as single. Qualifying dependents can be a child who lived with you for six or more months of the year or an elderly parent that you supported.

Take Common Tax Deductions

Paying attention to tax deductions can help reduce your taxable income, which maximizes your tax return. State sales tax is a major deduction that could be an option for you. You can use the IRS calculator to determine how much of your state and local income tax you may be able to deduct.

Out-of-pocket charitable contributions are tax deductible. People tend to only focus on larger donations. Smaller charitable donations can add up, so keeping track of them throughout the year can give you more available tax deductions.

If you’re paying student loans, you could be eligible for a student loan interest deduction. This deduction takes the interest you paid toward student loans out of your taxable income. Even if you aren’t the one actually paying your student loans, if the student loans are your responsibility to pay and they’re being paid, you could be eligible for the student loan interest deduction.

Depending on your expenses, taking the standard tax deduction might not be the best way to maximize your tax refund. If your deductions for the year were more than the value of the standard deduction, itemized deductions might be the best idea for you. It’s recommended to calculate the size of your tax refund with a standard deduction and itemized deductions and file based on which tax return is larger.

Claim Your Credits

Claiming tax credits that you’re eligible for can reduce how much you owe on your taxes. It’s important to look into available tax credits and their eligibility requirements.

The earned income tax credit is a tax credit available for individuals and couples who meet the income requirements. Having children can increase the size of your earned income tax credit. Your income and the number of children you have dictate the size of your tax credit.

Child tax credit is a tax credit available based on the number of eligible children you have. The amount of your child tax credit depends on your income and how many children you have. It’s intended to help offset the costs of raising children.

You may be eligible for education credits for certain purchases related to school or for school payments. You could also be eligible for tax credits for making energy-efficient updates to your home, like installing solar panels or a more efficient heating and cooling system.

Eligibility for tax credits depends on your income, filing status, and if you have eligible children. Tax credits are important to consider when deciding your filing status. Sometimes, filing as married, separately or jointly, could make you ineligible for certain tax credits.

Maximize IRA Contributions

For IRAs, you have until the tax filing deadline to open or contribute to a traditional IRA for the previous year. Traditional IRAs can reduce your amount of taxable income. You can take advantage of the maximum income contribution and the catch-up provision if you’re over the age of 50. 

Remember that Roth IRAs don’t give you a tax deduction for contributing. You could qualify for a savings credit if you meet certain income guidelines. If you’re self-employed, there are specific self-employment retirement plans that you can contribute to in order to get tax deductions.

Maximize HSA Contributions

There are pre-tax HSA contributions that can help you reduce your taxable income. In order to be eligible for pre-tax HSA contributions, you must be enrolled in a high-deductible health insurance plan that meets or exceeds the IRS’s required amounts. 

For HSA, your health insurance plan must impose the maximum annual out-of-pocket cost ceiling that meets the IRS’s limitations. You won’t be eligible for HSA if:

• You have other first-dollar medical care
• You’re enrolled in medicare
• You’re claimed as a dependent on another taxpayer’s tax return

Get Your Tax Refund Faster

There are a lot of different options that can help you increase your tax refund. When considering how to get the maximum tax refund, there are a lot of options you should look into and consider.

Getting your tax refund deposited directly into your Arkansas Federal bank account can help you get your tax refund faster. Your Arkansas Federal tax refund can give you access to your tax return weeks faster than other tax return options. 
Open a checking or savings account online today to access your tax refund faster. Opening a bank account is an easy process that you can start today from your home. Apply for an Arkansas Federal bank account today.