How to get a bigger tax refund with no dependents?

How to get a bigger tax refund with no dependents? checked here.

How to get a bigger tax refund with no dependents

Paying taxes is an unavoidable, necessary part of life. You could potentially receive some of what you’ve paid in taxes back with a tax return. But maximizing your refund requires some know-how.

Below, we take a quick look at how tax returns work and offer ideas that could help you get a bigger refund—and keep more money in your pocket to put toward your financial goals. We’ll also discuss whether getting a big refund is really all it’s cracked up to be or if there might be a better target you can aim for in future years.

How to get a bigger tax refund with no dependents?

How do tax returns work?

When you file your tax return, you are essentially providing the IRS with the information it needs to determine your tax liability for the year. This includes details about your income, interest or capital gains you may have earned, any deductions or credits you are claiming, your filing status, etc.

The IRS will use this information to determine how much taxable income you have for the year, which tax bracket you fall under and ultimately what your total tax bill is for the tax year. If your tax return shows that you have overpaid your taxes throughout the year—for example, because you withheld more from your paychecks than what you owe—you’ll get a tax refund. If it shows that you underpaid throughout the year, you’ll end up owing money.

What determines how big your tax return is?

To minimize what you owe in taxes and increase the likelihood of getting a bigger tax refund, you’ll need to find ways to reduce your taxable income—or the portion of your income that you’ll be required to pay taxes on. The good news is: By having a good understanding of tax regulations and working with a professional, there are many ways you can do this.

How to maximize your tax refund

Here are some actions you can take that can help you get the most back on taxes:

1. Itemize your deductions

Deductions are expenses you’re able to subtract from your taxable income, reducing the amount you’ll owe in taxes. What you’re able to deduct and how much depends on many factors, like your filing status and other qualifying expenses. Each tax year, you can decide to either take the standard deduction or itemize your deductions.

2. Contribute to tax-advantaged accounts

Another way to lower your taxable income for the year is to contribute to one or multiple tax-advantaged accounts. These are special types of accounts designed to incentivize saving and investing for certain financial goals—like retirement.

Tax incentives offered by these accounts can take multiple forms. For example, contributions you and your employer make to a traditional 401(k) are not included in your taxable income for the year. Instead, these taxes are deferred until you withdraw the the money in retirement. And with an IRA, you may be eligible to deduct the amount you contributed to your IRA that year from your taxable income—as long as you don’t exceed the income limits to do so.

Though different types of accounts come with different benefits, contributing to a tax-advantaged account will generally help reduce what you owe in taxes in a given year.

Examples of tax-advantaged accounts that you might consider contributing to include:

Retirement accounts: When you contribute to a traditional retirement account—such as a 401(k), 403(b) or IRA—you are making pre-tax contributions that reduce your taxable income. (Contributions to Roth accounts are made after taxes and do not lower your taxable income in the current year.)

Health savings accounts (HSAs): Contributions to an HSA, used to cover qualified medical expenses, are made with pre-tax funds and therefore will lower your taxable income for the year.

529 college savings plans: Contributions to 529 plans are made with after-tax funds, so they will not lower your federal income. But depending on your state (and the plan you are contributing to) these contributions may lower your taxable income on your state tax filing.

3. Ensure you are claiming the right credits

A tax credit is a dollar-for-dollar reduction in the amount of taxes that you owe the IRS. This makes them even more valuable than tax deductions, which simply reduce your taxable income for the year.

Consider, for example, a single filer who falls in the 22 percent tax bracket for the year and owes the IRS $5,000. If that single filer received a $1,000 tax deduction, it would translate into savings of $220, lowering their tax bill to $4,780. If the same filer received a $1,000 tax credit instead, their tax bill would be lowered dollar-for-dollar down to $4,000.

4. Adjust your filing status

Your tax filing status will directly affect your standard deduction. It will also affect which tax bracket you fall under and which tax credits you are eligible to claim.

A single filer, for example, will qualify for a much lower standard deduction compared to someone filing as a head of household. A single tax filer also will fall into a higher tax bracket even when making less money. Married couples can decide if they’re better off filing jointly or separately, depending on their incomes and other factors.

It’s important to regularly revisit your tax filing status as your personal situation changes. Life changes—for example, getting married or divorced, having children or purchasing a home—can impact what filing status will be most tax efficient in that year.

How to get a $10,000 tax refund? Tax deductions and credits may boost your refund. Which ones are available to new filers?

How to get a $10,000 tax refund?

You spent the year paying down your student loans, contributing to your savings, and having your employer withhold a portion of your paycheck for taxes. Now it’s time to file a tax return and you’re wondering if you can get any of that back. You might.

The IRS reported last year that taxpayers had left more than $1 billion in unclaimed refunds on the table. To ensure you get what you’re owed this year, take some time to research deductions and credits before you file your return. If you’re not sure which ones you may qualify for, here are some common deductions and credits new tax return filers can take:

Credits

American Opportunity Tax Credit

American Opportunity Tax Credit: If no one else claims you as a dependent, you may qualify for this credit of up to $2,500 for expenses you paid during your first four years of college.

Earned Income Tax Credit:

Earned Income Tax Credit: If you earned little money last year, you may be able to claim this credit. If you are filing as a single individual with no dependents and made less than $18,591, you may qualify for an up to $632 credit. If you're filing as a single individual with three or more dependents and made less than $59,899, you may qualify for an up to $7,830 credit. Information on other maximum credit amounts based on income and number of dependents can be found on the IRS website.

Lifetime Learning Credit:

If no one else claims you as a dependent, you may qualify for this credit of up to $2,000 for expenses you paid for post-secondary education and for courses to acquire or improve job skills.

Saver’s Credit:

If you are not claimed as a dependent and have contributed to a traditional or Roth IRA or a retirement savings fund, you may qualify for this credit up to 50%, 20% or 10% of your contribution, depending on your income level.

Deductions

Student Loan Interest Deduction:

If you made a payment on your student loans in 2024, you may deduct the amount of interest you paid on them or $2,500 from your taxable income, whichever is less.

The standard deduction: Most people take the standard deduction, the IRS explains, which allows you to subtract a set amount from your income based on your filing status:

$14,600 for single filers or those married but filing separately
$29,200 for married couples filing jointly or a qualifying surviving spouse
$21,900 for heads of households

Deductible expenses:

You may be able to deduct a few other expenses including money you put in an IRA or health savings account and money spent on the business use of your car or home. However, just because you work from home doesn’t mean you can deduct expenses for your home office. Workers must meet certain criteria to deduct a portion of their rent or utilities.

Itemized deductions:

If you do not take the standard deduction and choose to itemize your expenses instead, you may also claim deductions for things such as donations to charity, and gambling losses, including money lost on sports bets.

Maximize Your Tax Refund With These Expert-Approved Tax Hacks and Overlooked Deductions

It’s getting to be that tax time of year! Filing taxes, like paying taxes, may not be an enjoyable to-do, but receiving a substantial refund at the end can certainly make the process feel more worth your time. Wondering how to guarantee you get more money back in your pocket for the 2024 tax year? We asked tax experts for hacks to maximize your refund, including credits and deductions that could be a good fit for your situation.

Tax credits vs. deductions

One of the easiest ways to maximize your refund come tax season is through credits and deductions. Though both are beneficial, there is a key difference between them.!

“A tax deduction is going to lower your taxable income before calculating what tax you owe; while a tax credit is going to lower what you owe, dollar for dollar or get you a bigger refund,” says Katharina Reekmans, enrolled agent and tax expert with TurboTax. “Some can even get a tax credit even if they don’t owe anything as some tax credits are refundable, which means that even if you have no tax liability you will receive a refund.”

Overlooked tax credits that could boost your refund

Lifetime Learning Credit

This credit means you can receive up to $2,000 as a dollar-for-dollar credit on expenses paid. Who can qualify for this: “Students at any level of post-secondary education (including graduate school, vocational programs, and part-time courses),” shares Emily Luk (CFA/CPA), CEO and co-founder of the money management platform Plenty. The key is that you must be enrolled at an eligible institution that participates in the student financial aid program from the U.S. Department of Education.

Tuition, fees and required course materials all qualify for this credit. It will also cover the cost of programs/courses that involve workforce development and continuing education.

Other Dependent Credit

Though most people know that parents of young children are eligible for a credit, caregivers for individuals with a disability (regardless of age) are too. “If you are caring for someone other than a child dependent, you can take advantage of this tax credit which equals $500 per non-child dependent that you support,” shares Reekmans.

Residential Energy Credit

Installing solar panels, energy-efficient windows, doors, insulation or energy-efficient HVAC systems in your home may mean you qualify for this credit, says Luk. This applies to both renters and homeowners who have a new or existing home anywhere in the U.S. (Landlords, however, cannot claim it if they don’t live on the property.).

Retirement Savings Contribution Credit

Often called the “Saver’s Credit,” this tax credit involves retirement savings contributions to traditional IRAs and 401(k)s. It allows people to claim a credit worth up to $1,000 ($2,000 for married couples filing jointly) as long as they’re eligible.

It depends on how much you have contributed and your adjusted gross income (AGI). As long as your AGI is below the following thresholds, you may be able to claim it:

$76,500 for joint filers

$57,375 for head of household filers

$38.250 for anyone else filing

Smart tax deductions you may be missing

As mentioned above, tax deductions reduce the amount of income that’s taxable by the IRS. This means you can lower your total income tax bill and get a larger refund as a result.

According to H&R Block, there are two types of deductions: above-the-line and below-the-line. Above-the-line deductions are those that are subtracted from your gross income to calculate your AGI. Below-the-line deductions are known as itemized deductions and are deducted from your AGI to reduce your taxable income.

One tip when it comes to deductions? “There may be different deductions if you file separately vs. jointly so make sure you double-check which path maximizes deductions,” cautions Luk.

Here are some deductions that may be a fit for you:

Medical expenses

“They may be deductible if your expenses exceed 7.5% of your adjusted gross income in 2024 and only if you are able to itemize your tax deductions,” says Reekmans. “The cost of items, such as exercise equipment, or purchasing and maintaining a spa or swimming pool may be tax-deductible as medical expenses, but only if your doctor prescribed them to address a medical condition.”

Home office deduction

Anyone who is self-employed may be eligible for this deduction if they have a home office that meets IRS standards. “For example, if your home office represents 4% of your home’s total square footage, you may be eligible to deduct 4% off that property’s utilities, insurance, and property taxes,” the pros at H&R Block write. But there are strict rules for this to be a tax write-off!

HSA contributions

If you contribute to a Health Savings Account to save on health insurance costs, there’s good news: your after-tax HSA contributions are considered tax-deductible. One caveat? Contributions made by your employer may be excluded.

Charitable donations

Giving money to a non-profit can definitely count as a write-off, but this category is even more broad than you may think! “In addition to monetary donations, out-of-pocket costs related to volunteering, such as supplies and mileage (at 14 cents per mile), can also be deductible,” adds Reekmans. “It is not just large donations that count, keep track of smaller items like a cake donated for a charity’s bake sale.”

State taxes and local taxes

Known as the SALT deduction, this can help filers avoid double taxation. How it works: You can deduct up to $10,000 of property, sales or income taxes you have already paid to state and local governments. (Note: This SALT “cap” or limit will expire after 2025.) If you’re a resident in a state or city with high income and property taxes, this may be a beneficial option.

Knowing the credits and deductions you may be eligible for is one of the best ways to boost your refund potential. However, experts say there are other steps you can take throughout the year to maximize the money you get back when it’s time to file. Here are a few:

Keep accurate and thorough financial records. “This can lead to overlooking eligible deductions or credits which could have increased your refund significantly,” says Reekmans. “It is crucial to maintain documentation of expenses, charitable contributions, and other relevant financial transactions to ensure you are taking full advantage of deductions and credits available to you.”
Look into tax loss harvesting investments. “Each year, you get a one-time ‘gimme’ where you can harvest up to $3k and lower your income taxes,” advises Luk. This strategy allows you to offset taxable income by selling investments at a loss, potentially reducing the amount you owe.
Contribute to retirement accounts. They can help reduce taxable income, says Reekmans, and increase the potential for a refund as a result.
Bunch or delay deductible expenses when possible. “Strategically timing the payment of deductible expenses, such as medical bills or property taxes, to optimize deductions for the tax year [can help],” explains Reekmans.

Article How to get a bigger tax refund with no dependents? published on personal finance bytes