You have had taxes withheld from your paycheck all year. Now it is time to file your tax return. It is always nice to receive a refund check. There are two ways to receive a check from the IRS after filing your tax return. The best way is to reduce your tax liability through qualifying deductions. The other option is to pay more during the year than what your tax liability will be. To avoid overpaying (or underpaying) the IRS, you may want to consult with a tax professional.
How Can I Increase My Tax Refund?
Keep in mind that a tax refund is a return to you of overpayment of taxes that the IRS has received from you. That said, the easiest way to receive or increase a refund check is to increase what you pay or what is withheld during the year. One way to do that is by changing your tax filing status at any time during the year.
Changing your tax filing status may increase what is withheld from your paycheck and will reduce your take-home pay. You need to decide if you want to decrease your regular paycheck in exchange for a refund of your money at the end of the year. And if so, by how much.
The other option is to carefully track your deductible expenses and contributions during the year. With proper planning, you will be able to reduce your taxable income through qualifying deductions.
Change Your Withholding Amount By Completing An Updated Form W-4.
At the beginning of each year, you should review your withholding, complete a new IRS Form W-4, and return it to your employer. Under filing status, the Form W-4 informs your employer how to compute what is withheld in taxes from your check each pay period.
If you have not completed a form for 2021, you can request one from your employer or it can be downloaded from the IRS website. The form includes detailed instructions for computing your withholding. Regarding filing status, the decisions you need to make are:
- Married and filing jointly
- Married and filing separately
- Head of household
- How many dependents you can claim
You can also increase your withholding by a specific amount if you so desire. If you have income from another source, are self-employed in addition to your regular job, or have investments that are not taxed you may want to do that. Once you have completed the adjusted Form W-4, return it to your employer. Be sure to check your next paycheck to make sure the withholding has been changed.
Be Sure To Take Advantage Of All Your Qualifying Deductions.
You can increase your refund by reducing your tax liability by reducing your taxable income. Do you qualify for the Child Tax Credit? You and the child must meet the following requirements.
- The child must have been 16 years or younger at the end of the year for which you are filing.
- The child must be either your child, a stepchild, or foster child for whom you have court-assigned custody. An adopted child is always considered your own child. You may claim sisters, brothers, stepsisters, stepbrothers. Even descendants of those can be claimed if they meet all other requirements.
- The child cannot have provided more than half of their support during the year.
- It is required that the child has lived with you for more than half the tax year. There are exceptions to this, so do your research.
- It is required that you are able to claim the child as a dependent on your taxes. Do your research or talk with a tax specialist for specifics.
- The child must be a US citizen, US national, or US resident alien.
The other option for increasing your refund is to reduce your tax liability by reducing your taxable income. This can be done with qualifying deductions you can claim. Unless you are a tax expert, you would benefit by consulting with one. Some expenses you may be able to claim as deductions are:
- Qualifying medical plans, and medical expenses
- Qualifying charitable contributions
- Education expenses
- Childcare with qualifying individuals or organizations
- Certain business expenses
- Personal contributions to retirement plans
- Home mortgage interest
What Are The Options?
As said before, there are two ways to receive a refund check from the IRS after filing your tax return. Both require that you contribute more to the IRS than your tax liability will be at the end of the year. This allows the IRS to hold and use your money without compensating you.
You may need to increase your withholding to exceed what your tax liability will be. Or you will need to reduce your estimated liability through qualifying deductions when you file.
Consult Early In The Year With A Tax Specialist.
This is still early enough into this year to strategically increase your year-end tax refund if you decide to do so. If you are a disciplined individual, you can use extra in your paycheck to reduce any financial liability you might have in credit cards or loans. Then there’s the option to direct it to a deductible retirement plan. Your employer may have for which they will match your contribution. Though not your best option, you can put the cash in a separate account for emergencies and collect interest, though small.
The qualified professionals at Tax Crisis Institute are waiting to hear from you and guide you through the challenge of correct withholding. If your withholding is too high, the IRS hangs on to money you can probably put to use during the year. If your withholding is too low, there can be penalties for owing too much when you file your return. None of us wants to make donations to the IRS. And if you are not well informed, making tax decisions can be challenging. Give Tax Crisis Institute a call and let one of their qualified, experienced professionals help you.
Tax Crisis Institute has been a tax relief leader for over 30 years. When you work with the Tax Crisis Institute, we’ll make sure you don’t pay anything more than you owe!
Call Tax Crisis Institute today for a FREE consultation!