11 Biggest Tax Refund Tips You Probably Didn’t Know

biggest tax refund pile of 100 dollar bills on top of a 1040 form Middle Class Dad

Looking for your biggest Tax Refund this year?

Avoid the top tax return audit flags!

I’m sure most of us just want to pay our fair share but not a penny more.

We don’t have aspirations of intentionally underpaying or cheating the system.  But even if you follow all the rules, you could still be subject to an I.R.S. audit!

An audit can reduce or stop you from getting your biggest tax refund yet! At best it will certainly delay your refund.

In this post, we’re diving deep into all the legit ways of maximizing your refund from the IRS.

We’ll explore the top audit triggers to avoid and review what you can legally claim on your 1040 return for deductions.

Specifically though, we’re reviewing the top tips to help get your biggest tax refund yet!

Avoid the perils of the top audit triggers!

1. Only reporting part of your income

  • The safest bet is to report all income you received; even if someone paid you in cash and didn’t ask for your social
  • Make sure you’re reporting all interest income such as bank dividents
  • Cash out some company stock options?  Yup.  Claim that too

2. Home office expenses

  • It’s totally legit to claim a portion of home expenses if you genuinely work from home some of the time
  • But make sure you’re claiming reasonable percentages; especially in comparison to industry standards for the type of work you do
  • Correctly claiming all related home office expenses will increase your tax refund
  • Want more info?  Check out the IRS page on Home Office Deductions

3. Keep the salary down

  • While it may be tempting to try and earn millions, just know that your odds of an audit increase by 4 times once you make $200,000/year
  • Once your salary crosses a million, your audit odds go up by over 10%; good thing you can now afford your own CPA!

4. Look for a career path that doesn’t involve tips

  • If you work in the restaurant industry, for example, and claim too much or too little income, guess what?  Audit time
  • Any industry where a high percentage of income is possibly paid in cash or in tips draws attention

5. Keep your finances private

  • Many an audit has been triggered by a work associate or disgruntled family member making anonymous tips
  • If you disclose damaging info or even if someone misunderstands or is jealous of your situation, you can find yourself in the hot seat

6. Make sure your small business really is a business

  • The I.R.S. has no problem with your Amazon Seller account that earns you $500/month in extra cash
  • But your vintage Barbie collection you like to post about on Pinterest is a HOBBY
  • Don’t write off expenses unless it’s really a business

7. Filling a Schedule C

  • If you have a genuine small business you operate, it may make more sense to incorporate rather than filing a schedule c
  • Schedule C businesses are typically smaller Mom or Pop side business which have the potential to really just be a hobby
  • By incorporating you show the I.R.S. you’re more series and the chances of an audit go down

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The danger of filing your return too early!

biggest tax refund 1040 form with a magnifying glass and a calculator Middle Class Dad

I have always operated under the assumption that the closer to April 15th you file, the lower the audit chances.

After all, except for glaring errors that will obviously trigger an audit, the I.R.S. just has a certain percentage of returns they audit.

The audits start in early January. Thus it stands to reason that as time goes on, more and more of the automatic audits for no particular reason have already happened.

Once their quota is filled, unless your return looks unusual, you’re much less likely to get audited.

Who gets a tax refund?

As we work a job, unless you are classified as an independent contractor, your employer is withholding federal income tax.

The amount they withhold is simply based on how many allowances you claimed when you filled out your W4 form.  The amount withheld is calculated based on your income.

Thus if you claimed a 1 on your form and you make $50,000/year, they will withhold less than someone who claimed 1 who makes $100,000/year.

So based purely on that, without factoring in things like deductions, you could very easily find that you overpaid throughout the year.  Thus you may well be eligible for a tax refund.

In short, anyone who paid in more than they owe can get a refund. But follow my tips to make sure you get the biggest tax refund possible!

If you aren’t getting a refund or may owe and can’t pay, make sure to follow my proven steps to file a Tax Extension before the April 15th deadline!

What can you claim on your tax return?

Taxpayers often overlook some very simple deductions that would reduce their taxable income.  Get your biggest tax refund by following these simple tips. Unless you are single and childless you probably stand to benefit from itemizing your deductions.

If you are itemizing, the following are MUSTS for your list of deductions!

  • Home Ownership Expenses
    • Mortgage Interest
    • Property Taxes
  • Refinance Expenses
    • If you paid points to refi your home, you can deduct that money
    • The points get divided by the life of your loan (ie: 30 year loan, divide the total point cost by 30)
    • That is your annual deduction for refi loan points
  • Child Care Expenses
    • This isn’t just for traditional day care!
    • This can often include summer camps and other instances where you pay an organization to watch your child
  • Income Tax you paid last year
    • If you wrote the I.R.S. a check last time, guess what?  That’s deductible now!
  • Moving Expenses
    • If you moved for work and they didn’t pay for the move guess what?  You can deduct those moving expenses
    • To qualify you have to have moved more than 50 miles
    • Even if your employer did pay, if you incurred additional out of pocket expenses, you can claim above and beyond what they covered
  • Unreimbursed Medical Expenses
    • In this day and age, it’s virtually impossible to not have out of pocket medical expenses
    • Deductibles, out of pocket costs or premiums if you pay for your own healthcare are all tax deductible
    • Check out the IRS page on Medical Expense Deductions for more info
  • Claim state sales tax
    • If you paid it, you can claim it on your Federal Income Tax

Related: Make sure to avoid the 13 worst Common Tax Mistakes

What is the best thing to do with your tax return?

If you have debt (other than a mortgage), that is the first place I would put my tax refund.

If you don’t have any debt other than a mortgage, you’re doing great!  In that case I would look at how much you have Saved for Retirement. If you have kids and don’t yet have a plan for how to Save for College, that too is a great place to invest that money!

Covered in all those areas?  Great! Set it aside in savings for home upgrades or a vacation later in the year! And the tips here in my post will help you get the biggest tax refund possible!

Get your biggest tax refund quicker by ensuring a complete return

You’re all set to send in your return!

You’re excited about that biggest tax refund you hope to get.  But if you forget any of these crucial steps, guess what?

At best you’ll significantly delay your refund.  At worst you may have triggered an audit.

Just double check before mailing your return that you are doing/including all of the following:

  • Sign your return!
    • This is the #1 most common tax return mistake according to the I.R.S.
    • Forgetting to sign is the equivalent of not filing
    • Once you’ve passed April 18th (the deadline to file for an extension), you’re potentially facing a 25% fine
    • If they don’t notify you that you forgot to sign until after 4/18, guess what: it’s still your problem!
  • Your W2
    • Unless you’re retired or self-employed you will have received at least one w2 form.
    • The state requires one copy (if you have state income tax) and the Federal Government requires a different copy
    • This must be filed with your return
  • Your Direct Deposit Info
    • If you are getting a refund double check the routing number and bank account info you put down
    • Routing numbers are always 9 digits, whereas bank accounts vary in length
    • Being off by even 1 digit may delay your refund or send your cash to someone else!
  • Your Social Security Number
    • This number tells the I.R.S. exactly who you are
    • There are a lot of John Q. Publics, but only 1 with your unique 9 digit code
  • Make sure your name matches your social
    • Check spelling
    • Ensure the middle name is listed the same (full name or initial?)
    • Make sure to use a maiden name if that’s still how Social Security has it
  • Make sure your math is solid
    • If you’re using a web company or program this is less of a concern
    • If using a calculator, double check your math to make sure it’s correct
    • Aside from forgetting your name, this is the most common error
    • The I.R.S will generally catch and correct the errors, but if you owe money and the error means you owe more, you may also generate penalties

Owe a bunch and want to set up an IRS Payment Plan? I highly recommend you take a moment and review my steps on how to get that set up quickly and correctly!

Do you get more tax return if you are married?

The short answer is typically yes; you do pay less income tax if you are a married couple.

But don’t take my word for it.  The IRS says “most couples find that their income tax liability is lower if they file jointly, as opposed to filing separately.”

As a married couple (and this applies to legally married gay and lesbian couples too), you must file as married. However, you have the option to file “jointly” or “separately”.

Personally, as a married man, I have always filed jointly and I believe that allows us to get the biggest tax refund possible.

But check out this page from the IRS on how Getting Married Affects Your Taxes for greater detail.

So what are my . . .

11 Biggest Tax Refund Tips You Probably Didn’t Know?

biggest tax refund guy working on a laptop writing in a notebook Middle Class Dad

1. File Your Return Sometime Between February 15th and April 15th

  • This can reduce your chance of an audit

2. Triple Check Your Return to Ensure It Is Signed

3. Make Sure to Include Your W2 and any 1099 Forms

4. Itemize Your Deductions

  • The US Government Accountability Office conducted a study a short time back
  • That study  is Taxpayers Who May Have Overpaid Federal Taxes by Not Itemizing
  • In that study they found that about 70% of tax payers don’t itemize
  • Of those 70%, about 948,000 may have overpaid by not itemizing
  • Those 948,000 taxpayers overpaid by as much as $945,000,000!!!

5. Deduct any State Income Taxes Paid

6. Claim All Home Owner Related Deductions

  • Deduct Property Tax
  • Claim Mortgage Interest
  • Also claim any points paid on a refi

7. Triple Check to Make Sure Any Math Is Accurate

8. Make Sure Any Direct Deposit Account Numbers Are Accurate

  • Routing numbers and account numbers can look similar
  • Routing numbers are always 9 digits and can be easily Googled if you’re unsure

9. Use a Professional Tax Preparer

  • Sure you can save money by doing it yourself or with a program
  • But a good tax preparer who’s been doing this for years and keeps up with IRS code changes can be worth their weight in gold
  • A professional can often find deduction you might miss
  • Your tax preparer also takes some of the heat in the event of an audit
  • Check out the results of a contest comparing tax refunds by software vs a professional courtesy of CBS Money Watch

Any tips or ideas you have to get your biggest tax refund yet?

In this post, we took an in-depth look into the world of the IRS and income taxes.

We walked through proven tips and strategies to maximize your return and reduce your chances of an audit.

Specifically, we looked at the best tips to get your biggest tax refund so you can put a few extra bucks in your pocket and not sweat the possibility of an audit as much.

Also be aware that with each new President, tax laws can change and the information here could become dated.  I strive to update my factual posts annually, but always double check!

Of course I have to offer the standard disclaimer here: I am not a tax professional and you should always seek the advice of a CPA or other tax professional.  While I do have decades of experience running million dollar businesses and have many years of personal experience with taxes, ultimately, the opinions offered here are mine based on my personal experience, knowledge and research and should not be interpreted as legal or financial advice.

Photo credits (that aren’t mine):
Money and Tax Return by 401(K) 2012 is licensed under CC by 2.0
Tax Forms and Calculator by 401(K) 2012 is licensed under CC by 2.0 – modified by me
Search! (Magnifying glass added to above) by Jeffrey Beall is licensed under CC by 2.0 – modified by me