How to Get a Bigger Tax Refund and Save Big on Your Taxes

Aug 31

7 min read

Looking to increase your tax refund and keep more money in your pocket? Understanding how to achieve a larger tax refund can have a significant impact on your financial well-being. With constantly changing tax laws and a wide range of deductions available, navigating the complex world of taxes can be overwhelming. However, by implementing intelligent strategies and staying informed, you can maximize your refund and save significantly on your taxes. Remember, for personalized advice tailored to your specific circumstances, it's always wise to consult with tax professionals like R&F Tax Group when completing your next tax return.

Understand Recent Tax Law Changes

Keeping up with the latest tax law changes is important for maximizing your tax refund. Recent updates have made significant adjustments to tax brackets, standard deductions, and the Child Tax Credit. Let's take a closer look at these changes and how they could impact your tax situation.

Updated Tax Brackets

The tax system in the United States uses a progressive structure with different tax rates applied to various income levels. For the 2024 tax year, the brackets have been adjusted for inflation. Here's a breakdown of the new tax rates for single filers:

· 10% for incomes up to $11,600

· 12% for incomes over $11,600

· 22% for incomes over $47,150

· 24% for incomes over $100,525

· 32% for incomes over $191,950

· 35% for incomes over $243,725

· 37% for incomes over $609,350 [1]

It's important to note that these rates apply only to the portion of your income that falls within each bracket. This means you don't pay the higher rate on your entire income when you move into a new tax bracket [2].

Standard Deduction Increases

Good news for taxpayers who don't itemize deductions: the standard deduction has increased for the 2024 tax year. Here are the new amounts:

· $14,600 for single taxpayers and married individuals filing separately

· $29,200 for married couples filing jointly

· $21,900 for heads of households [1]

These increases can potentially lower your taxable income, possibly resulting in a larger refund.

Child Tax Credit Modifications

While significant changes to the Child Tax Credit were proposed, they didn't pass into law. However, there are still some updates to be aware of:

· The maximum credit remains at $2,000 per qualifying child for 2024.

· The refundable portion, known as the Additional Child Tax Credit, has increased to $1,700 for 2024, up from $1,600 in 2023 [3].

It's advisable to consult with tax professionals to make the most of these changes and potentially increase your tax refund. R&F Tax Group can assist you in navigating these updates and optimizing your tax return.

Claim All Eligible Business Expenses

To get a larger refund, it's crucial to claim all eligible business expenses. Doing so can reduce your taxable income and increase your refund. Let's explore some key areas where you can maximize your deductions.

Home Office Deductions

If you regularly use a part of your home for business, you may be eligible for the home office deduction. This applies to different types of homes, such as houses, apartments, condominiums, mobile homes, and even boats [4]. However, for your home office to qualify, it must be the main place of your business or a spot where you regularly meet with customers or clients.

You have two options for calculating your home office deduction:

1. Percentage method: Calculate the percentage of your home used for business and apply it to your total home expenses.

2. Simplified method: Use a rate of $5 per square foot, with a maximum of 300 square feet [4].

Remember, the space must be used exclusively for business purposes, with some exceptions like daycare services [4].

Vehicle Expenses

Here's the revised text:

You can deduct related expenses if you use your car for business purposes. There are two ways to calculate these deductions:

1. Standard mileage rate method

2. Actual expense method

The standard mileage rate method is more straightforward and requires tracking your business miles. The actual expense method involves calculating the actual costs of operating your vehicle for business use, including gas, oil, repairs, insurance, and depreciation.

To qualify for vehicle expense deductions, you must keep detailed records of your business use. Parking fees and tolls related to business use are separately deductible, regardless of the method you choose [5].

Professional Development Costs

Investing in your skills can also lead to tax benefits. You may be able to deduct work-related education expenses if they maintain or improve skills needed in your current work. However, education that qualifies you for a new career is generally not deductible. [6][7]

Deductible expenses can include:

· Tuition and fees

· Books and supplies

· Transportation costs related to education

It's important to note that these deductions are subject to specific rules and limitations. Consider consulting with tax professionals to ensure you're claiming all eligible expenses correctly and maximizing your tax refund. R&F Tax Group can assist you in navigating these deductions and optimizing your tax return.

Maximize Your Charitable Contributions

Understanding how to maximize your charitable contributions is essential for increasing your tax savings while supporting causes you care about.

Cash Donations

When you donate money to qualified charities, you may be able to reduce your taxliability by itemizing your deductions. Typically, you can deduct up to 50% of your adjusted gross income (AGI), but there are cases where 20% and 30% limitations apply [8]. To maximize your deductions, you can consider consolidating several years' worth of charitable donations into one year, which can be especially beneficial if you are close to the standard deduction limit. You can use a charitable giving tax savings calculator to estimate the potential savings [9].

Non-Cash Donations

Remember that when you donate non-cash items, you can still benefit from significant tax advantages. You can deduct the fair market value of donated items such as clothing and household items when donated to qualified organizations [8]. For donations valued at less than $250, you need a written receipt from the organization and a list of donated items with their value [10].

For larger donations:

- $250 to $500: Obtain a "contemporaneous written acknowledgment" from the charity [10].

- $500 to $5,000: Fill out IRS Form 8283 in addition to the acknowledgment [10].

- Over $5,000: Require an official appraisal along with the acknowledgment and Form 8283 [10].

Consider donating long-term appreciated assets like stocks or real estate. This strategy allows you to avoid capital gains tax and take an income tax deduction for the full fair-market value, up to 30% of your AGI [9].

Qualified Charitable Distributions

If you're 70½ or older, you can benefit from Qualified Charitable Distributions (QCDs). A QCD allows you to donate up to $105,000 in total to one or more charities directly from a taxable IRA. This strategy can help you meet your required minimum distribution while potentially avoiding higher income tax brackets [11].

Key QCD benefits:

- Excludes the donated amount from taxable income [12]

- Can support multiple charities within the $105,000 limit [11]

- May reduce required minimum distributions in future years [11]

To maximize your charitable contributions and potentially increase your tax refund, consider consulting with tax professionals. R&F Tax Group can assist you in navigating these strategies and optimizing your tax return while supporting your favorite causes.If you're 70½ or older, you can benefit from Qualified Charitable Distributions (QCDs). A QCD allows you to donate up to $105,000 in total to one or more charities directly from a taxable IRA. This strategy can help you meet your required minimum distribution while potentially avoiding higher income tax brackets [11].

Key QCD benefits:

- Excludes the donated amount from taxable income [12]

- Can support multiple charities within the $105,000 limit [11]

- May reduce required minimum distributions in future years [11]

Key QCD benefits:

- Excludes the donated amount from taxable income [12]

- Can support multiple charities within the $105,000 limit [11]

- May reduce required minimum distributions in future years [11]

Conclusion

Navigating the complex world of taxes can be challenging, but implementing the strategies discussed in this article can have a significant impact on your tax refund. By staying informed about recent tax law changes, claiming all eligible business expenses, and maximizing your charitable contributions, you're better equipped to optimize your tax situation. These approaches not only help you save money but also ensure you're taking full advantage of the deductions and credits available to you.

Remember, every taxpayer's situation is unique, and what works for one person may not be the best strategy for another. To make the most of these tax-saving opportunities and potentially boost your refund, it's wise to seek professional guidance. Contact R & F Tax Group now to complete your next tax return! Their expertise can help you navigate the intricacies of tax laws and ensure you're making informed decisions to achieve the best possible outcome for your financial well-being.

FAQs

1. What are the requirements to qualify for a $7,000 tax refund through the Earned Income Tax Credit?

To be eligible for up to $7,000 from the Earned Income Tax Credit (EITC), you must meet the following criteria:

· Earned income must be less than $63,398 for the tax year.

· Investment income must be under $11,000 for the tax year 2023.

· Possess a valid Social Security number by the due date of your 2023 tax return, including extensions.

2. How can someone receive a $10,000 tax refund?

You can receive a $10,000 tax refund if the taxes you've paid throughout the year exceed the amount you owe. This typically happens when excessive tax payments are made relative to your tax liability.

3. What steps should I take to increase the amount of money I get from my tax return?

To adjust your tax withholdings and potentially increase your refund, you can:

· Submit a new Form W-4 to your employer to change the withholding amount from your regular pay.

· Complete and submit Form W-4P to modify the withholding from pension, annuity, and IRA distributions.

4. How can I maximize my tax refund for the year 2024?

To maximize your tax refund for 2024, consider financial strategies such as opening a Certificate of Deposit (CD), contributing to a high-yield savings account, or investing in various ventures. Exploring these options can help you choose the best approach based on your financial situation.