Legitimate ways to boost your tax refund amount

Most taxpayers receive a tax refund every year. For most of us, maximizing the tax refund is what makes all the difference. You need to make sure that you utilize all the ways to boost your tax refund, including recovery rebates for stimulus payments, child/dependent tax credit, charity contributions, lesser-known tax credits, and a few more. At Consumer Opinion Guide, we have researched and prepared six of the best legitimate ways in which you can maximize your tax refund amount. We will walk you through them so you can make sure that you are getting the most out of your tax refund when working with some of the best tax relief companies out there!

6 ways to boost your tax refund

Tax refunds vary by year and the current country’s “climate”. For example, in 2022 many families got their refund significantly reduced or flat-out eliminated due to advance child tax credit payments in 2021. Needless to say, this can happen in the future as well. Another example is the recovery rebate for coronavirus stimulus payment checks. To get the largest possible refund, you will want to explore the following options:

  • Child/dependent tax credit
  • Avoid standard deductions if you can itemize
  • Contributions to charity
  • Recovery rebates for stimulus payments
  • Contribution to retirement/other qualified plans
  • Lesser-known credits
a micrometer holding coins
By utilizing all the options, you will have a much larger tax refund.

In 2021, the IRS reported that the agency has issued almost 122 million refunds, with a value of over $736 billion. Most taxpayers are eligible for a tax refund if they are current on their taxes, in one way or another. But to maximize the tax refund, you will want to employ the above strategies. How exactly can you do that?

Claim children/dependent tax credits

If you are supporting your children or have people that are dependent on you, you are eligible for a tax credit. For example, the child tax credit amount in 2021 is $3,000 per child or $3,600 for a child under the age of 6. Do note that you may have already received half of this credit in advance payment. Even if you opted out of the program, or have not previously claimed a child or dependent care credit, you are still eligible.

Furthermore, these credits vary by year. The year 2021, for example, experienced an increase in the child/dependent care credits to $8,000 for one dependent, and $16,000 for two or more qualified individuals. Of course, this credit can only apply to individuals who are incapable of self-care, either physically or mentally, as well as children under the age of 13. And if you have a newborn, you are entitled to an additional refund.

If you had a baby in 2021, chances are that you have not received an adequate refund, as chances are that the IRS did not have that information when they sent advanced payments. You always want to ensure that you are up-to-date with any dependent credits you might be eligible for, as they change from year to year. Some years can see a significant increase, other years might even see a reduction (which is, admittedly, quite rare).

Don’t always go for the standard deduction

While the standard tax deduction is quite good on its own, it is not always the best option for you. If your itemized deductions are larger than what the standard deduction offers, it is in your best interest to itemize on your tax return. If you happen to be a single person with a somewhat high mortgage, you are in the prime position to itemize, according to Jerry Zeigler who is a SaverLife financial coach and enrolled agent.

You may also want to lean on other deductions when doing so, such as the mortgage interest tax deduction, medical expense deduction, etc. All of these can help you exceed the standard deduction, quite significantly in some cases. And, of course, you will want to utilize the “power” of charitable contributions.

One of the most popular ways to boost your tax refund is to deduct contributions to charity

Charity and taxes go extremely well together. If you are wondering why so many rich people donate to various charities, taxes are the reason. Donating to charity is a great way to get deductions on your tax return, and you can even do so if you claim the standard deduction. Granted, in those cases, you will only be eligible to get a return up to $300 for cash contributions, or $600 if you and your significant other are filing joint returns. Of course, if you are donating to charity specifically for tax returns, make sure that the charity is on the qualifying charity list.

charity donation, representing one of the ways to boost your tax refund
Donations to charity are awesome in so many regards.

But donating to charity need not be all about taxes. If you spend some time looking, you are sure to find a cause you can believe in. Donating to something that you stand for is a great feeling, after all. And, of course, you are helping a noble cause.

Claim recovery rebate for stimulus checks

This way of boosting your tax refund is mostly connected to the COVID-19 pandemic. But it is applicable whenever the government sends stimulus checks. If you haven’t received a third stimulus payment in 2021, for example, nor the plus-up payment, you may be eligible for a recovery rebate credit on your 2021 tax return. Even in cases where you get your payment in full, there’s still a chance that the stimulus payment is inaccurate. If you happen to receive less than you’re due, you can get it back in your tax refund.

While this may apply to the coronavirus pandemic now, the process will be more or less the same for any recovery rebates in the future. You might as well go through the process, get some money out of it, and know the procedure for future years. The process can change, yes, but it is unlikely that it will.

Contribute to IRA

Another great way to get more money on your tax refund is to contribute to your individual retirement account. There’s a contribution limit, however, currently set at $6,000. The deduction and contribution limits depend mostly on your adjusted gross income, however, and change from year to year. One thing is certain, though, and that is that you have until the filing deadline to make that contribution.

Contributing to IRA is a sensible thing to do in any case, and it comes with a sizeable tax refund. It is something that you definitely need to consider regardless of whether you want to maximize your tax refund or not.

Utilize lesser-known credits as one of the ways to boost your tax refund

There are various tax credits that you can apply to your situation. For example, there’s the adoption tax credit, federal solar tax credit, earned income tax credit, and even a non-business energy credit. These are all “lesser-known” credits and chances are that you haven’t heard about the non-business energy credit up until this point.

solar panels
Solar credit can be quite substantial.

Homeowners are eligible for non-business energy credit if they have energy-efficient items that meet certain ratings. The main reason is due to the fact that it is not a large credit. The second reason is that there is a lifetime limit of $500 on it. But that is just the starting point. You can include a solar credit in your tax return, which has no limitations. In 2021, this credit was 26%, meaning that there were significant savings.

Other notable credits include:

  • Lifetime learning credit
  • Premium tax credit
  • Foreign tax credit
  • American opportunity credit

Lifetime learning credit

This credit is equal to 20% of education expenses, and it goes up to $2,000 each year. Of course, your education needs to qualify for the credit and your adjusted gross income cannot be more than $69,000 if you are a single taxpayer, or $138,000 if you are filing jointly with your spouse. There is no cap for the lifetime learning credit.

Premium tax credit

For most people, premium tax credit comes in the form of a health insurance premium subsidy. This credit is offered to households that earn qualifying income and who are buying insurance coverage through the government. The credit itself is refundable and varies by the family’s income as well as the price of health insurance in the area.

Foreign tax credit

If you paid any foreign taxes on your income that is also subject to the U.S. income tax, you are eligible for the foreign tax credit. This is very common in middle-class families where there’s an investment in foreign mutual funds. The dividends you receive from those funds are usually subject to foreign tax, as well as U.S. tax.

American opportunity credit

While not exactly a “lesser-known” credit, the American opportunity tax credit is one of the best ways to boost your tax refund, as it allows you to get a significant tax refund if your kids are going to college. For example, you may be eligible for up to $2,500 per student credit for the first four years of undergraduate education (up to $1,000 of which is refundable). To claim this credit, a student needs to be enrolled at least half-time for the duration of one academic period. Another way to get the credit is if the student is pursuing a degree. Expenses that are eligible for this credit are tuition, books, and any fees for attendance in class.

  • For more useful tax-related tips and guidelines as well as access to the services of some of the finest tax relief companies, make sure to reach out to the Consumer Opinion Guide for assistance!

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