Tax season is in full swing, and if you’re really on top of things, you may have already filed your taxes well ahead of the deadline. But for those who haven’t filed, Tax Day is right around the corner, set for April 18. Many of us put off dealing with our taxes because the process is confusing, in general, but it can also be overwhelming trying to figure out what deductions to take—and how to secure the biggest refund.
“People often overlook great tax-saving opportunities because they simply don’t know about them,” Eric Bronnenkant, head of tax at Betterment, tells Best Life. “Or, because tax laws change, it gets hard to keep up with the latest deductions, credits, and exemptions.”
Thankfully, tax experts are here to help, and they say there are a few key ways to save that you might not even be aware of. Read on for five tips to boost your 2022 tax return.
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There are five different filing statuses, according to the Internal Revenue Service (IRS): single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child.
According to tax experts, married couples should put some thought into how they file—as it can affect the size of their refund.
“Even though over 95 percent of married couples file jointly, it’s not always the best option,” Colin Smith, CPA and founder of CPAExam Maven, tells Best Life. “Filing separately takes extra time and effort, but can offer increased tax savings and boost your tax return.”
Smith says this might benefit you if your spouse has significant medical expenses or COBRA (Consolidated Omnibus Budget Reconciliation Act) payments following a job loss. “Here, filing taxes separately can lead to a larger amount of tax deductions,” he says.
Unmarried taxpayers shouldn’t choose their filing status absentmindedly either, according to Smith.
“For unmarried taxpayers who have a qualifying dependent, their tax bill is often cut if they file as head of household, as this status brings a higher standard deduction and more favorable tax brackets,” he says.
There’s still time to contribute as much as possible to your health savings account (HSA), if you have one, Charlene Rhinehart, CPA and personal finance editor at GoodRx, tells Best Life.
Each year, the IRS sets a limit for the amount you can contribute. For 2022, the limit is $3,650 if you have health coverage for yourself and $7,300 if you have coverage for your family, according to Fidelity. For those over 55, you can tack on an additional $1,000. Whatever amount you choose to contribute then reduces your taxable income.
“Even though we are well into 2023, many people may not be aware that there’s still time to make contributions to your HSA for the 2022 tax year,” Rhinehart says. “As an individual, you can make contributions of up to $3,650 right up until Tax Day on April 18. Contributions made directly into your HSA (as opposed to those automatically deducted from your paycheck) can result in a tax deduction.”
“Plus, you have that money available to you to use on medical expenses down the road, so it’s a win-win,” Rhinehart adds.
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Rhinehart also recommends checking out tax credits to help give your 2022 refund a boost.
“There are many tax credits that can help you either reduce your tax bill, or in some cases, can give you money back in your tax return,” Rhinehart says. “Some of these tax credits may be surprising, so it’s always a good idea to double-check the list, even if you don’t think you qualify. You might qualify for a refundable credit if you had a baby any time during 2022 via the child tax credit (CTC) or qualify for a nonrefundable credit if you purchased an electric vehicle last year.”
For the CTC, parents with children under the age of 17 are eligible for up to $2,000 per child, Bronnenkant explains. This number is actually down from 2021, when the credit amount for those under age six was $3,600 and $3,000 for those under 18.
Students shouldn’t overlook the American Opportunity Tax Credit (AOTC), Bronnenkant says—it’s available to those in their first four years of college. Also, he recommends looking for tax credits for any “energy-efficient home improvements” you made in 2022.
Smith suggests looking for some of the lesser-known tax deductions when filing. Tax deductions differ from credits, as they reduce your taxable income before you calculate what you owe, according to the IRS. Credits, on the other hand, reduce the taxes you owe or increase your refund.
First and foremost, consider your out-of-pocket charitable contributions. This year, the IRS did away with the standard deduction for charitable donations, which allowed individual taxpayers to take a $300 flat deduction and married couples filing jointly to take $600. To qualify for this deduction in 2022, you need to itemize your donations.
With this in mind, Smith recommends looking back on smaller donations you made instead of focusing solely on the big ones.
“Keep track of small contributions, like the canned goods you donated to a food drive. If you tend to do a lot of these activities, you’d be surprised at how quickly these small expenses can add up,” he says.
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You may not realize that you can also deduct qualifying medical expenses on your 2022 return and lower the amount you owe, Rhinehart says. In fact, there are a few expenses you might be surprised to learn you can apply.
“You’ll have to itemize your deductions instead of taking the standard deduction,” she explains. “Qualifying expenses include transportation to a healthcare facility, hearing aids, pregnancy tests, prescription medications, and any payments made to your medical providers.”
Rhinehart notes that this strictly applies to fees you paid out of pocket, and anything your insurance or flexible spending account (FSA) reimbursed you for won’t count.
“It’s also important to remember that you can only deduct expenses that exceed 7.5 percent of your adjusted gross income, so it’s a good idea to keep your receipts and run the numbers by a qualified tax professional to see if it even makes sense to deduct these expenses,” she says.