A tax refund is the difference between the amount you paid in taxes throughout the year and what you owe when you file your return. For example, if you had $10,250 withheld from your paychecks in 2022 and end up owing $8,500 in taxes for the year, you’ll get a refund of $1,750.

According to the IRS, the average refund dropped from $3,536 in 2022 to $3,140 for the first half of the 2023 tax filing season, largely due to pandemic tax credits coming to an end. If your refund looks a little smaller this year, try double-checking your return for common credits and deductions. These six tips may help you lower your tax bill and increase your tax refund.

1. Try Itemizing Your Deductions

Although most taxpayers use standard deductions based on their filing status, you may benefit from itemizing your deductions if you have large expenses like mortgage interest, medical bills, and charity donations to deduct. It’s only worth itemizing if your total deductions add up to more than what your standard deduction would be.

Standard Deductions for 2022 Tax Year:

• Single or married filing separately: $12,950
• Head of household: $19,400
• Married filing jointly: $25,900

2. Double Check Your Filing Status

Although you can’t file as married if you’re single, or vice versa, you may want to consider your options if you’re single with qualifying dependents or married filing either separately or jointly.

Head of household filers are unmarried with qualifying children or other dependents (such as elderly parents) who live with them at least six months out of the year and receive more than half of their support from the taxpayer. Head of household filers get a bigger standard deduction than single filers ($19,400 versus $12,950 in 2022) and they have more generous tax brackets as well.

Married couples may consider filing separately if one spouse makes significantly less than the other and would qualify for credits, such as the child tax credit, if their income were considered alone. Filing separately disqualifies you from taking some other deductions and credits, however, so you may want to calculate your taxes both ways to determine which filing status saves you the most money.

3. Make a Retirement Contribution

Contributions to a traditional 401(k), 403(b) or other employer-sponsored plan, or to a traditional IRA, are tax deductible in the year the contribution is made. Typically, IRA contributions must be made by the tax filing deadline, excluding extensions. In 2023, the deadline (for filing your 2022 taxes) is April 18.

For the 2022 tax year, you can contribute up to $20,500 to an employer-sponsored retirement plan such as a 401(k) or 403(b), with a catch-up contribution of $6,500 if you’re 50 or older. Additionally, you can contribute up to $6,000 to an IRA with a $1,000 catch-up contribution if you’re 50 or older. Deductions for IRA contributions may phase out if you have an employer-sponsored plan at work and exceed certain income levels.

Contributions to a Roth IRA or Roth 401(k) are not tax deductible, though if you have one, you’ll enjoy tax-free qualified withdrawals from a Roth account when you retire.

4. Claim Tax Credits

Tax credits that were expanded during the COVID-19 pandemic may have expired, but many credits that lower your tax bill dollar for dollar are still available to taxpayers who qualify. Among the most common tax credits for the 2022 tax year:

• Child Tax Credit: You can claim a $2,000 child tax credit for each qualifying child under 17 in your household. The child tax credit begins phasing out at a marginal adjusted gross income (AGI) of $400,000 for married couples filing jointly and $200,000 for all other tax filing statuses.
• Child and Dependent Care Credit: The child and dependent care credit allows you to claim 20% to 35% of your care expenses up to a maximum of $3,000 for one dependent or $6,000 for two or more dependents if you needed care so you could work or look for work.
• Earned Income Tax Credit: The earned income tax credit helps low- and moderate-income taxpayers lower their tax bills with a refundable credit that pays you a refund if the credit exceeds your taxes owed.
• Energy-Efficient Home Improvements: A $500 lifetime energy efficient home improvement credit is available if you made qualifying upgrades to your home in 2022. Additionally, 30% of your qualified expenditures for improving residential energy efficiency may be eligible for the residential clean energy property credit.
• Electric Vehicle Credit: The rules for claiming a tax credit if you purchased an electric, plug-in hybrid or other clean energy vehicle became more complicated in 2022. Check with a tax professional if you’re planning to buy a new vehicle this year to maximize your eligibility for this tax credit.

5. Contribute to Your Health Savings Account

Contributions to your health savings account (HSA) are tax-deductible. Individual taxpayers can contribute up to $3,650 to an HSA for 2022 with an additional $1,000 contribution if you’re age 55 or older. Families can contribute up to $7,300.

To qualify for an HSA, you must have a high-deductible health plan, which the IRS defines as a health plan with a minimum annual deductible of $1,400 or higher for individuals and $2,800 or higher for families.

6. Work With a Tax Professional

Knowing the ins and outs of the U.S. Tax Code is literally a full-time job. A qualified tax professional can help you find all of your available credits and deductions, make decisions about your filing status and eligible dependents, and plan for the tax year to come. If you have investment income, a side business, inherited money or anything else that may complicate your tax return, the expertise of a tax professional can be priceless.

The Bottom Line

One way to increase next year’s refund is to adjust your withholding. By contributing more toward your tax bill with each paycheck, you’ll increase the amount you pay in during the year—and thereby increase your chances of getting a bigger refund. However, be forewarned that most tax experts advise against planning for a really big refund. When you do this, you’re essentially loaning the federal government money for free—money you could be saving and investing on your own.

On the other hand, many taxpayers enjoy getting a refund at tax time. It’s a simple, automatic way to save money and it can feel like a reward for doing your taxes. Once tax time arrives, focus on getting the biggest refund you can: The bigger the refund, the better.

Contact O1ne Mortgage for Your Mortgage Needs

If you’re looking to make the most of your tax refund, consider investing it in your future with a mortgage from O1ne Mortgage. Our team of experts is here to help you navigate the mortgage process and find the best loan options for your needs. Call us today at 213-732-3074 for any mortgage service needs. Let O1ne Mortgage help you achieve your homeownership dreams!