Business and Finance

3 Proven Ways To Get A Huge Tax Refund

For those looking for some tax tips, we discuss 3 proven ways to get a huge tax refund. From software to ways to save, read our tips before filing taxes.
3 Proven Ways To Get A Huge Tax Refund
Robert Hybki

A breadwinner works hard all year long while taxes are slowly withheld from his or her earnings. This method of paying taxes over the course of a year is good for both the wage earner and the IRS because it happens slowly and is guaranteed. However, The IRS does understand that raising a family, running a business, and saving for the future creates expenses and hardship for qualified households, so they give those taxpayers a break through allowances, which may result in a tax refund. The allowance game can be played one of two ways:

  • Claim fewer allowances on your W4 so that more tax is taken out during each pay check. This action results in the potential for a larger refund at the end of the year. The drawback is that employees take home less each pay period and are paying the IRS more than necessary. The IRS does not pay interest on the voluntary loan you give them.
  • Estimate and claim an accurate number of allowances on your W4 so that a correct or smaller amount of taxes are withheld from each pay check. This action results in the potential for a small refund or possibly a tax delinquency where the wage earner has to write the IRS an extra check. The benefit to this scenario is that wage earners take home the maximum each pay period and the IRS does not get a free loan. A reason to stay away from this allowance structure is if a worker has trouble saving money on her or his own and needs the government to force them.

If you find yourself leaning toward the first idea of claiming fewer allowances than the IRS allows, here are three useful tips to increase and maximize your eventual tax refund.

Deduct Professional Expenses

Deduct professional expenses you pay for but your employer benefits from. One of the best examples of this idea is a personal cell phone. If you put your cell phone number on your business cards and your company does not reimburse you for it, deduct your annual cell phone bills to the extent you use your cell phone for business purposes.

Shelter Annual Income

Shelter your annual income by saving for the future and taking advantage of qualified health care accounts. Tax payers leave billions of dollars in the hands of the IRS because they do not participate in company retirement saving plans or individual retirement accounts (IRA/ROTH). Deferring income into these savings accounts is a three-fold benefit; workers save for the future, taxable income is lessened, and many times employers will match contributions. On a different note, health care and child care expenses can be sheltered as high as $10,330 each year!

If you are in the 25% tax bracket, you just increased your refund by $2500! Most Tax payers pay these types of bills either way. Simply routing predictable bills through proper accounts is an effective method to decrease what you owe in taxes. The more income a tax payer can divert into these types of qualified accounts, the higher the refund. It is that simple.

Invest In Professional Services

Invest in proper tax preparation through tax software, a tax service chain, or a certified public accountant. Let’s assume your tax refund is $1000 when you file on your own, but for a $100 investment you could utilize the talents of a tax expert (human or software) and hypothetically discover two additional credits you were unaware of thereby increasing your refund to $2000! The odds are too good not to take advantage of and the best part is that any price paid for professional tax services is tax deductible! Get a bigger refund and a discount on the price of a tax expert, score!

Clearly a little effort on the part of the tax payer can truly add to a household’s spending power. Prudent tax planning and saving for the future should be taken seriously, but don’t forget to treat yourself to a little luxury during the process. Financial Planners recommend leveraging your tax return to pay debt and save for emergencies, but they also know a person stays on the track to financial freedom if he or she uses a piece of that refund on something lighthearted. Maximize your tax refund and take control of your bottom line!

What are some of the ways you maximize your tax refund? Share your tips and advice with our readers in the comments section below.

Click to add a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business and Finance
Robert Hybki
@rhybki

While attending grad school in 2013, I decided to share my frugal tips, shopping advice and favorite deals with the world. This led to the creation of Shop Retail Deals, which is now Frugal Buzz.

More in Business and Finance

What You Need To Know About Installment Loans

Pinched For Cash: What You Need To Know About Installment Loans

The Frugal Buzz TeamDecember 10, 2016
What is the Cycle of Market Emotions?

What Is The Cycle Of Market Emotions?

Robert HybkiDecember 9, 2016
How To Start A Blog

Step-By-Step Guide: How To Start A Blog

Robert HybkiOctober 29, 2016
Ways to Manage Your Money as a Freelancer

How Freelancers Can Attain Financial Stability in 6 Steps

Maricor BunalSeptember 2, 2016
How To Make An Extra Few Bucks On Pinterest

How To Make An Extra Few Bucks On Pinterest

The Frugal Buzz TeamMay 18, 2016
Simple Tips for Paying Off Credit Card Debt

Simple Tips for Paying Off Credit Card Debt

Robert HybkiApril 4, 2016
Six Steps For Small Businesses In A Big World Wide Web

Six Steps For Small Businesses In A Big World Wide Web

Robert HybkiMarch 1, 2016
Best Apps For Personal Bill Management

Best Apps For Personal Bill Management

Barney WhistanceFebruary 5, 2016
Simple Tips To Reach Your Financial Goals

Simple Tips To Reach Your Financial Goals

Robert HybkiJanuary 13, 2016