The best time to ensure you received the largest possible tax refund for 2022 was before the end of 2022.
The good news is that it’s not too late to try to get a bigger refund for the 2022 tax year, the one your return is due for by April 18.
Here are some steps to review before you file your 2022 federal income tax return to ensure you get as large a refund, or as small a tax bill as possible at this point.
Bigger refunds aren’t always better
Getting a big tax refund might sound great, but a bigger refund could also mean you’re withholding too much tax from your paycheck. This means that Uncle Sam can use your money without interest during the tax year.
If you’re not sure you’re withholding the right amount, use the free IRS Tax Withholding Estimator Tool. Then, if you want to change your withholding tax, fill out a W-4 form to let your employer know the exact amount to keep more money in your pocket during the year.
That said, let’s look at ways to increase your tax refund that don’t involve excessive restraint.
1. Contribute to a Traditional IRA
You can reduce your 2022 taxable income, which generally reduces your tax liability, by contributing to a traditional Individual Retirement Account (IRA) for the 2022 tax year before the contribution deadline, which is April 18 . This is because contributions to traditional IRAs, unlike Roth IRAs, are tax deductible for the applicable tax year, which means they reduce your taxable income.
Even if you contribute to your employer’s 401(k) at work, you may also be able to set aside money in your traditional IRA. However, not everyone is eligible to contribute to an IRA, and the IRS limits contribution amounts, so check IRA account limits.
2. Contribute to an HSA
If you have a high-deductible health insurance plan, you can set aside money in your Health Savings Account (HSA) for the 2022 tax year until the April 18 deadline. An HSA contribution can help reduce your amount of taxable income.
Remember that HSA dollars can stay in your HSA account until you need them. See how much you are eligible to put into your HSA account by checking the contribution limits.
3. Contribute to an MSA Archer
Self-employed people and employees of small businesses can usually contribute to an Archer Medical Savings Account (MSA) if they are covered by a high-deductible health plan. The deadline for contributions to an Archer MSA for the 2022 tax year is April 18.
An Archer MSA is similar to an HSA in that it is a type of tax-advantaged account in which someone can save money for qualified medical expenses – and contributions are tax deductible. ‘tax.
4. Choose the most valuable tax status
When preparing your tax return, you will need to determine which tax status best suits your situation. This is crucial because your filing status determines the amount of your standard deduction, which is easily the largest federal income tax deduction most people receive.
Filing statuses are basically technical terms for the IRS, so they don’t necessarily mean what you might think. For example, not all singles should choose “single” as their filing status. If they qualify for head of household status or eligible surviving spouse status — both of which have a higher standard deduction than single status — they could save hundreds of dollars or more in taxes by choosing the head of household. household or surviving spouse instead of single.
Another possible pitfall to be aware of is that there are downsides to the separate filing status of the bride and groom. For example, people who claim this status are not eligible for certain tax credits, such as education credits. Married couples must therefore weigh the pros and cons when deciding whether to file an application jointly or separately.
The IRS offers a free service What is my filing status? tool to help you determine which status best suits your situation.
5. Make sure you get all the tax breaks you’re entitled to
Since many tax credits are returning to pre-pandemic limits or being discontinued altogether for the 2022 tax year, refunds may be lower than the last time you filed. It is therefore particularly important to take the time to ensure that you obtain all the credits and all the deductions that apply to your situation.
Not sure what credits or deductions you are entitled to? Visit the IRS website to see if there are any you missed before filing.
6. Get a second opinion
Whether you see a paid tax professional or one of the many qualified tax volunteers across the country, consider getting a review of your tax return before you file it to make sure you haven’t missed any credits. or deduction.
Free programs like Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) can file your tax return at no charge, although you may need to make an appointment to meet with one of their volunteers.
