How to Get the Most Money Back on Your Tax Return

Submitted by 360Blue Financial Strategies on January 16th, 2023

Between gathering the necessary paperwork and working through complicated scenarios, tax season can be a stressful time. You’ve worked hard throughout the year, and you want to be sure you’re taking the right measures to get the maximum amount back on your return. Achieving this, however, takes diligence and research.

5 Considerations During Tax Season

Looking at your whole financial picture will give you a better idea of the actions you can take to minimize your tax obligation and maximize your return. While this can take some time, it’s worth thinking through all your expenses to increase your potential for receiving a sizeable tax return. Luckily, we’ve compiled a list of five key considerations when aiming to maximize your return.

Consideration #1: Claim Your Retirement Tax Deduction

You can make a contribution to your IRA (up to $6,000 if under 50 and $7,000 if 50 and older for 2022) up until the filing deadline to receive a tax deduction. If you are covered by a plan at work, your deduction may be limited or eliminated depending on your filing status and your modified adjusted gross income. If not covered by work, you can claim a full deduction.1,2

Consideration #2: Claim All Other Possible Deductions

Many expenses can qualify as deductions, meaning they can be claimed to help minimize the amount of taxable income. Common qualified expenses include charitable contributions and state and local income, sales, and property taxes. However, there are a number of other deductions that all taxpayers should remember. These include work-related education expenses, such as tuition, books, supplies, transportation, and travel costs. If you needed to complete work to maintain a professional certification, for example, anything related to doing so may qualify.3

Consideration #3: Make Sure to Claim All Dependents

Dependents are not limited to children. They can include relatives who live in your home as members of your household, such as relatives who are not physically or mentally able to care for themselves. If the individual has an income of less than $4,400 and is not a dependent on another individual’s return, they may qualify as your dependent. Additionally, the person must be a U.S. citizen, U.S. alien, or U.S. national.4

Through the Tax Cuts and Jobs Act changes in 2017, personal exemption deductions were suspended from 2018 until 2025. However, until then, you can still receive tax credits for children and dependents. You may receive up to $500 in tax credits for a qualifying dependent who is not a child of yours. However, this credit may be eliminated or reduced if your adjusted gross income exceeds $200,000 when filing alone or $400,000 when filing jointly.5,6

Consideration #4: Consider Itemizing Deductions if You’re Able

If the sum of your allowable deductions is higher than the standard amount, itemizing your deductions is recommended. In some cases, you’ll be able to get a bigger refund than by taking the standard deduction. If you’re at the cusp of the standard amount, double-checking your receipts and expenses over the year may be an important step in determining whether or not to itemize your deductions. You can itemize deductions on expenses such as medical and dental care, mortgage interest, charitable giving, and theft losses. However, in certain cases, you’ll be required to opt for one or the other. If you file a joint return with your spouse and you wish to itemize, for example, you and your spouse both must then itemize your deductions.7

Consideration #5: Claim Refundable Tax Credits

Unlike a deduction that minimizes what you owe or a nonrefundable tax credit that only refunds up to what you owe, a refundable tax credit is money returned to you—such that even if you owe $0, the IRS will send you the remaining balance. Refundable tax credits come in many forms. For example, credits may be given to those with expenses in a foreign country in order to avoid double taxation. You can also receive a credit when contributing to retirement savings, paying adoption fees, or paying higher education expenses.8

If you’re dealing with a complex tax scenario, you can always lean on the assistance of a certified public accountant. Filing your taxes can feel like a daunting task, but putting in the extra time and effort to make sure you’re taking full advantage of your tax return can pay off.

_{Material discussed is meant to provide general information and it is not to be construed as specific advice. United Planners and its representatives do not offer tax or legal services.}

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