Paying more taxes throughout the year is often suggested to optimize your tax return. However, financial experts don't usually recommend this approach. Getting a bigger tax refund means the government has been holding onto your money, which you could have otherwise used for personal investments.

If you prefer a larger tax refund instead of more disposable income during the year, there are effective strategies to achieve this. Here are four practical methods.

Remember, a larger refund isn't always the best financial move. With precise tax return status tracking, you can plan better. Use a tax return calculator to understand what you might owe or receive back. This approach allows you to manage your finances more actively, possibly leading to better outcomes than waiting for a tax refund.

Selecting the Right Tax Filing Status for a Better Refund

The initial step involves selecting an appropriate tax filing status when working towards a more substantial tax refund. There are five primary categories to consider:

• Single
• Married filing jointly
• Married filing separately
• Head of household
• Qualifying widow(er) with a dependent child

It's essential to note that not everyone has the flexibility to alter their filing status. For instance, if you're only eligible to file as single, that's your set category. However, you might not know that you qualify for a more beneficial status, like head of household. A higher standard deduction and other tax benefits may result from choosing this status, improving your tax return status.

If you're married, filing jointly may lower your taxable income due to higher thresholds, which is critical when using a tax return calculator. Joint filing often yields better tax results than filing separately.

Sometimes, filing separately as a married couple is better. One spouse often qualifies for itemized deductions if they have significant yearly medical expenses. Evaluating your specific circumstances is crucial to determining the most beneficial filing status. This evaluation can significantly impact your tax refund and overall tax return status, ensuring you make the most informed decision for your financial health.

Retrieve and Access Tax Credits

Child Tax Credit

Parents of children under 17 will benefit significantly from the Child Tax Credit in 2022. Each eligible child in your household can receive $2,000. The expanded credit of $3,000 from 2021 is gone, but this credit still helps. Remember that this credit is partially refundable.

A refund is another option if the credit exceeds your tax bill. Credit loss applies to couples filing jointly earning over $400,000 and individuals earning over $200,000. Know this: high earners. Use a tax return calculator to determine how this credit affects your refund and filing status.

Energy-Efficient Home Improvements

If you made qualifying energy-efficient upgrades to your home in 2022, you might be eligible for a $500 lifetime credit.

Furthermore, expenses towards improving residential energy efficiency could qualify you for a 30% credit under the residential clean energy property credit. These credits can significantly impact your tax refund and should be included when using a tax return calculator to estimate your tax return status.

Dependency Credit

Use Child and Dependent Care Credit for work or job search expenses. This credit reimburses 20%–35% of care for one dependent up to $3,000 or two or more up to $6,000. It takes care of your partner, their children under 13, and other dependents who cannot care for themselves and live with you for more than six months.

Earned Income Tax Credit

The EITC helps low- to moderate-income earners. If your refundable credit exceeds your taxes, you may receive a refund. The eligibility criteria can be complex, but it's worth investigating if you fall within this income bracket.

Tools like the IRS's interactive tax assistant can be helpful, and incorporating this credit into your tax return calculator can give you a better idea of your potential tax refund and overall tax return status.

Electric Vehicle Credit

The Electric Vehicle Credit rules changed in 2022, making it more complicated but potentially beneficial. Some manufacturers like Toyota and Tesla are no longer eligible for this credit due to meeting their quotas.

Additionally, vehicles must now be assembled in North America to qualify. If you purchased a clean energy vehicle in 2022, check if it allows for a tax credit. Remember, these credits can influence your tax return status and the amount of tax refund you might receive, so include them in your tax return calculator estimates.

The Inflation Reduction Act of 2022 has also brought changes, so consult a tax professional for the latest information, especially if you're considering a purchase in 2023.

Maximizing Tax Benefits with Retirement Savings

Traditional 401(k), 403(b), and IRA contributions are deductible in the year they're made, lowering your taxable income. IRA contributions must be made by April 18, 2023, to qualify for 2022 tax deductions.

401(k) and 403(b) contributions are capped at $20,500 in 2022. Contribution is $6,500 for 50+. The maximum IRA contribution is $6,000 plus $1,000 for those over 50. You might lose IRA deductions after certain income thresholds if you have employer-sponsored health insurance.

Roth IRA and Roth 401(k) contributions are not tax-deductible immediately. The tax-free withdrawals after retirement are the main benefit of these accounts. Financial planning, especially tax-efficient retirement savings, can benefit from this feature.

This function can be beneficial to track and prepare for your tax return. Using a tax return calculator can be helpful to estimate how these contributions impact your financial situation.

Understanding these options and their limits helps effectively manage your tax return status and maximize your tax refund. Regular use of a tax return calculator can assist in making informed decisions about your retirement savings and their tax implications.

Maximizing Tax Benefits through Health Savings Accounts

Experts like Gilbert and Hamasaki recommend using health savings accounts (HSAs) to manage healthcare costs effectively and benefit from tax savings. HSA-contributing health plans must meet IRS high-deductible regulations.

The 2023 minimum deductible is $1,500, and the maximum amount deductible is $7,500. Pre-tax contributions reduce taxable earnings and increase tax refunds.

HSAs offer a triple tax advantage. First, your contributions lower your taxable income. Then, the funds in the HSA grow without incurring taxes. Lastly, withdrawals for qualified medical expenses are tax-free. Your tax return calculator can benefit from this unusual combination.

If your employer offers a flexible spending account (FSA), you can set aside pre-tax money for healthcare. FSAs offer tax benefits despite their rollover restrictions.