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Top 5 Ways to Maximize Your Tax Refund

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Top 5 Ways to Maximize Your Tax Refund

Filing taxes is a priority for every US taxpayer before the deadline (April 17 this year). That includes W-2 employees, self-employed individuals, independent contractors and freelancers. Unfortunately, when you're racing to organize your records and gather your documents to file your taxes, it's easy to forget about the ways to maximize your refund. And whether you're a W-2 employee or a freelancer, there are a few things every taxpayer should know about how to get the best possible tax refund.
Key takeaways:
  • Full-time employees are more likely to overpay on taxes.
  • Tax credits are one of the best ways to maximize your tax refund.
  • Tax deductions help self-employed people reduce their tax liability by a higher margin compared to full-time employees.

Table of contents

Maximizing your refund as a full-time W-2 employee...Read more

Carefully choose your deduction method...Read more

What is a filing status?...Read more

Claiming business expenses as a self-employed individual...Read more

Contributions to charities or retirement plans...Read more

Using tax credits to maximize your tax refund...Read more

Maximizing your refund as a full-time W-2 employee

The taxes that W-2 employees are required to pay are directly withheld from their monthly paychecks by their employers, who estimate – or more likely overestimate – what they will owe at the end of the year. That means full-time employees almost always overpay and end up receiving a refund. Employees also fill out W-4 forms to give their employers information about their individual tax situation, so that their employer doesn't withhold more tax than necessary from their paychecks. The W-4 is an IRS tax document where employees can claim tax credits they qualify for, such as: More on credits like these later. If you're filling out a W-4, you should also report any self-employment income outside of your full-time work. More tax will be withheld from your paycheck, but you won't need to worry about paying quarterly estimated taxes on that income yourself. As a full-time employee, you can claim personal tax deductions like charitable contributions, medical expenses and student loan interest. Employees can also contribute to retirement accounts like traditional IRAs or a 401(k) plan. These contributions can help lower your tax liability further and get you a larger tax refund. Just make sure you make these contributions during the year and before the tax filing deadline. When you file your 2023 tax return, make sure to carefully check all the deductions you claim, so that the return you file is error-free, and you're sure to get any tax overpayment refunded accurately. FlyFin A.I. simplifies and automates this part of the tax filing process, helping you track all your deductions and find every possible write-off, as well as offering 24/7 CPA consultation and tax filing.

Carefully choose your deduction method

There are two methods of taking tax deductions, the standard deduction method and itemizing your deductions. Any taxpayer will naturally want to choose the method that brings them the maximum deduction. The standard deduction is a fixed deduction amount that is uniform for every taxpayer, though it varies for different filing statuses. For single filers, it's $13,850 for the 2023 tax filing season, up by $900 compared to last year.

What is a filing status?

A filing status helps you clearly identify your tax rate. The IRS has created the following four filing status, and every tax filer must choose one based on their individual tax situation:
  • Single filer
  • Married couples
  • Married couples filing separately
  • Head of household
There are some limitations on what you can choose, for example, if you are married you can choose to file as a single filer, but the reverse is not true. When you are filing as a married couple, you get a higher standard deduction value, so the IRS wants you to benefit from this only if you are actually married. For the 2023 tax season, the standard deduction for married couples filing jointly is up by $1,800 to $27,700. The same applies to the head of household, who will now be able to deduct $20,800 as a standard deduction from their taxable income, $1,400 more than in the last tax year.
Infographic table entitled 2023 Standard Deduction vs. 2022 Standard Deduction, showing the standard deduction amounts in 2022 and 2023.
Depending on individual tax situations and the amount of money you can save, you can choose different filing statuses when you have documents to support your status.

Claiming business expenses as a self-employed individual

If you run a small business, you can claim qualified business expenses as self-employment deductions from your taxable income. These expenses include a wide variety of purchases you make to keep your business running. The IRS says that these expenses should be "necessary and ordinary" for your type of business, meaning they need to be common purchases made to carry out your business and be necessary for your line of work. If you're a freelance delivery driver, gas is a necessary expense. If you have your own landscaping company, tools qualify as a business deduction.
This infographic has the top business tax deductions for delivery drivers, which include write-offs like vehicle repairs, phone costs and insurance.
To write off your business expenses, you'll need to keep track of them and save your receipts for tax filing. Using a tax deduction calculator is an easy way to find write-offs you can claim. For a doctor operating as a sole proprietor working out of a home clinic, business deductions can include diagnostic tools, chairs for the waiting area and home office deductions like utilities and internet expenses.

Contributions to charities or retirement plans

Like W-2 employees, self-employed individuals can also invest in retirement plans and government insurance programs. As a freelancer, independent contractor or self-employed individual, you can contribute to an SEP-IRA or a Solo 401(K) and mention this on your tax return to lower your taxable income. SEP stands for self-employed pension and is aimed at promoting retirement savings for self-employed individuals. If you contribute to the SEP-IRA now, which has a maximum annual contribution limit of $6,000, you can deduct it from your taxable income. If your tax return shows an overpayment, you’ll get it back as a refund.

Using tax credits to maximize your tax refund

Once you know your adjusted gross income (AGI), you can check if you qualify for any tax credits. The IRS uses your AGI as an indicator to check if you are eligible for tax credits. One of the most widely taken advantage of tax credits is the Earned Income Credit. To take advantage of it, you must:
  • Have US citizenship
  • Have a valid Social Security number
  • File a tax return even if you don't owe taxes
  • Be between 25 and 65 years old
  • Not be claimed as a dependent on another person's tax return
Some tax credits are refundable, meaning you can receive a refund if the credit amount is greater than the amount of tax you owe. The Earned Income Credit is refundable, and if you qualify for a $3,733 credit, but you only owe $2,000 in tax, you will get a $1,733 refund. Another commonly claimed credit is the Child Tax Credit for parents with qualifying dependent children, if their adjusted gross income is within the required range.
This infographic has the main criteria for qualifying dependent children to qualify for child tax credit
This might seem like an overwhelming amount of information, but fortunately apps like FlyFin can simplify taxes for you. FlyFin's A.I. finds all your qualifying tax deductions within minutes and has an expert team of CPAs to help you with every aspect of your tax filing that can help you maximize your tax savings.

Tax Write-Offs

Self-employed individuals can use tax write-offs to lower taxes. These itemized deductions should be reported on Schedule C.

How Long Should You keep Tax Returns

American taxpayers need to keep tax records for at least three years. This may change depending on which state you live and the type of business you run.

Tips For E-Filing 1099 Taxes

Filing taxes is a complicated process, but following a few simple but crucial steps can help you be prepared to e-file your 1099 taxes.

Top 5 things to remember about 1099 tax form

Remember these five important things about 1099 taxes, if you're a self-employed individual, freelancer or independent contractor.

Filing Taxes Self Employed

Only FlyFin uses a unique combination of A.I. and CPAs to find every qualifying deduction for freelancers, self-employed individuals and independent contractors.

Deductions For Tax Savings

For freelancers, the most effective way to save on taxes is by taking advantage of tax credits and the many tax deductions they qualify for.

Top Ways To Save Taxes Using Write Offs

Looking to maximize your refund for the 2023 tax filing season? Check out our guide to the top 10 tax write-offs for W-2 employees, independent contractors, self-employed individuals, freelancers and small business owners.

Claim Tax Deductions For Small Business

Small business tax deductions are the same as tax write-offs. You can claim a standard or itemized deduction based on your business expenses to decrease your taxes.

Self Employed Tax Filing

Self-employment tax forms like Schedule C and Schedule SE should be included with form 1040 when filing taxes.

How FlyFin Helps Claiming Tax Write Offs

Tax write offs are business expenses that are tax deductible. With FlyFin, you can easily claim itemized deductions and bring down your tax amount.

File Taxes With W2 and 1099

You can file a 1099 and W-2 together if you receive them in the same year. This can also lower your quarterly tax payments or get you a QBI deduction.

Tax Filing For Green Card Holders

Anyone who has a green card in the USA will need to pay taxes if they meet the IRS-set income threshold.

Avoid Penalties For 4th Quarter Estimated Taxes

Estimated taxes are required for self-employed individuals on a quarterly basis. If you missed the deadline for the fourth quarter, there is still time to make the payments and avoid penalties.

How To Deduct Stock Losses From Your Taxes

Capital loss deductions allow for taxpayers to write off stock market losses and pay less in taxes. The IRS allows you to deduct up to $3,000 per year.

How To File Back Taxes

Everything you need to know about how to file back taxes and claim tax refunds and credits before it's too late. The IRS lets you file back tax returns for up to six years.

How To File Patreon 1099 Taxes

Patreon creators can use FlyFin’s 1099 calculator to find business expenses they can write off on their tax forms.

Tax Write-Offs

Self-employed individuals can use tax write-offs to lower taxes. These itemized deductions should be reported on Schedule C.

How Long Should You keep Tax Returns

American taxpayers need to keep tax records for at least three years. This may change depending on which state you live and the type of business you run.

Tips For E-Filing 1099 Taxes

Filing taxes is a complicated process, but following a few simple but crucial steps can help you be prepared to e-file your 1099 taxes.

Top 5 things to remember about 1099 tax form

Remember these five important things about 1099 taxes, if you're a self-employed individual, freelancer or independent contractor.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology. Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. In addition, you can download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and money.
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