What determines how much you get back

Your tax refund is the difference between what you paid in taxes during the year and what you actually owed. The larger that gap, the larger your refund. You can widen that gap in two ways: pay more during the year through withholding, or claim deductions and credits you're may have access to to but haven't claimed yet. Most people leave money on the table by missing credits they may have access to for or by not adjusting their withholding after a major life change.

The IRS doesn't volunteer to give you more money back. You have to claim it. That means finding every deduction and credit that applies to your situation, documenting it, and reporting it on your return. A refund that looks small often means you haven't looked hard enough.

Key Takeaways

  • Your refund grows when you claim tax credits you may have access to for—especially the Earned Income Tax Credit and Child Tax Credit, which can return thousands of dollars.
  • Deductions reduce your taxable income, but credits reduce your tax bill directly, so credits are worth more to most people.
  • If you had major life changes—marriage, divorce, a new job, a child born—your withholding is probably wrong and you're either overpaying or underpaying.
  • Keeping receipts and records for medical expenses, charitable donations, student loan interest, and childcare costs throughout the year makes claiming deductions possible at tax time.
  • A tax professional or free tax software can spot credits and deductions you'd miss on your own, and the cost often pays for itself in a larger refund.

Tax credits that return the most money

Tax credits are direct reductions to what you owe, not reductions to your income. A $1,000 credit saves you $1,000 in taxes. A $1,000 deduction saves you $1,000 times your tax rate—usually 12% to 22% for most households. This is why credits matter more than deductions for most people.

The Earned Income Tax Credit (EITC) returns between $600 and $3,995 depending on your income and family size. You must have earned income—wages, self-employment income, or similar—but you don't have to owe taxes to claim it. Many people with low to moderate incomes may have access to but don't claim it because they don't know it exists. The IRS has a tool on irs.gov to check whether you may have access to.

The Child Tax Credit is $2,000 per child under 17. If you have custody and claim the child as a dependent, you get the credit. Part of it is refundable, meaning you can get money back even if you owe zero taxes. The Child and Dependent Care Credit covers childcare expenses you paid so you could work—up to $3,000 in expenses per year, which can return up to $900 in tax savings.

The American Opportunity Tax Credit covers education expenses for students in their first four years of college—up to $2,500 per student per year. The Lifetime Learning Credit covers graduate school and other education expenses with a $2,000 annual limit. You can't claim both for the same student in the same year, so choose the one that gives you more money back.

Deductions that reduce what you owe

You can either take the standard deduction—a flat amount that depends on your filing status and age—or itemize deductions by listing them out. Itemizing only makes sense if your deductions add up to more than the standard deduction. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. If your itemized deductions don't exceed those amounts, take the standard deduction and move on.

If you do itemize, the main deductions are mortgage interest (not the principal), property taxes up to $10,000 per year, state and local income taxes up to $10,000 per year, charitable donations, and medical expenses above 7.5% of your adjusted gross income. Keep receipts for all of these. Medical expenses include insurance premiums you paid yourself, prescription costs, dental work, and travel to medical appointments.

Self-employed people can deduct business expenses—office supplies, equipment, a portion of home office rent, vehicle mileage, and health insurance premiums. Keep records of everything. The IRS allows a simplified home office deduction of $5 per square foot if you don't want to track actual expenses.

Adjusting your withholding to avoid overpaying

Your employer withholds taxes from each paycheck based on a form you fill out—the W-4. If you're getting a large refund every year, you're withholding too much, which means you're giving the government an interest-free loan. You can adjust your withholding to bring home more money each month instead.

Update your W-4 after major life changes: marriage, divorce, a new job, a child born, a spouse starting or stopping work, or a significant raise. The IRS has a withholding calculator on irs.gov that asks about your income, deductions, and credits and tells you what to claim on your W-4. If you adjust it correctly, you'll owe little or nothing at tax time and get a small refund instead of a large one—which means you had the money when you needed it.

If you're self-employed or have income without withholding, you may need to make quarterly estimated tax payments. These are due April 15, June 15, September 15, and January 15. Paying them on time avoids penalties and keeps you from owing a large amount on April 15.

Documenting expenses throughout the year

The difference between a small refund and a large one often comes down to whether you kept records. Receipts for charitable donations, medical expenses, childcare, and education costs are not optional—the IRS can ask for them years later. Digital photos of receipts work. A spreadsheet or folder where you collect them as the year goes on takes minutes per week and saves hours at tax time.

For charitable donations, keep the receipt from the charity or a bank statement showing the transfer. For medical expenses, keep the bill and proof of payment. For childcare, keep invoices from the provider and proof you paid them. For education, keep the bill from the school and proof of payment. If you're self-employed, keep every receipt related to your business—fuel, supplies, equipment, software, professional services.

If you don't have a receipt for something you know you paid for, some expenses can be documented with a bank or credit card statement showing the payment. But a statement alone is usually not enough—the IRS wants to see what the payment was for. Start now, even if tax time is months away.

When to use a tax professional or software

Free tax software from the IRS Free File program or from providers like IRS Free File partners can walk you through deductions and credits you might miss. The software asks questions about your situation and flags credits you're may be able to access for. If your situation is straightforward—W-2 income only, standard deduction, no dependents—software usually works fine.

A tax professional becomes worth the cost when you have self-employment income, rental property, investment income, dependents, education expenses, or significant itemized deductions. They know credits and deductions that software might not catch, and they can structure income in ways that reduce your tax bill. A professional often pays for themselves by finding deductions or credits you didn't know existed.

If you earned less than a certain amount (which changes yearly), you may be able to use IRS Free File through a partner like TurboTax, H&R Block, or TaxAct at no cost. Check irs.gov/freefile to see if you may have access to. If you don't may have access to for Free File, tax software typically costs $60 to $150 depending on how complex your return is.

Common refund mistakes to avoid

Claiming a dependent you're not may have access to to is one of the fastest ways to trigger an audit. The person must live with you for more than half the year, be a U.S. citizen or resident alien, and be related to you or meet specific tests. If you share custody, only one parent can claim the child each year—usually the one with custody for the majority of the year. Coordinate with the other parent to avoid both claiming the same child.

Forgetting to report all income is another common mistake. This includes 1099 income from side work, interest from savings accounts, and dividends. The IRS gets copies of these forms too, and mismatches trigger notices. If you received a 1099 but didn't report it, report it now—the penalty for reporting late is usually smaller than the penalty for not reporting at all.

Rounding numbers instead of using exact amounts can flag your return for review. Use the actual amounts from your receipts and statements. If you're claiming a large deduction you can't fully document, be prepared to explain it or reduce the amount.

Frequently Asked Questions

Can I claim a refund for taxes I paid in a previous year?

You can file an amended return for the past three years using Form 1040-X. If you discover you overpaid or missed a credit, you can claim a refund for that year. The IRS typically processes amended returns in about 16 weeks. You must file within three years of the original return's due date or two years from when you paid the tax, whichever is later.

What if I'm claimed as a dependent by someone else—can I still get a refund?

Yes, but you can't claim the standard deduction unless you had income. If you had W-2 or 1099 income and taxes were withheld, you can file a return to get that money back. You won't be able to claim yourself as a dependent, but you can still claim credits like the Earned Income Tax Credit if you meet the requirements.

Does getting a large refund hurt me in any way?

A large refund means you overpaid taxes throughout the year—you gave the government more money than you owed. You get it back, but without interest. If you adjusted your withholding correctly, you'd have that money in your paycheck each month instead. A small refund or a small amount owed is usually a sign your withholding is correct.

What's the difference between a refund and a tax credit?

A tax credit reduces what you owe. A refund is money the IRS sends you because you overpaid. Some credits are refundable, meaning if the credit is larger than what you owe, the IRS sends you the difference as a refund. The Earned Income Tax Credit and part of the Child Tax Credit are refundable.

Can I claim expenses my employer reimbursed me for?

No. If your employer reimbursed you for an expense, you can't deduct it. You can only deduct unreimbursed expenses. If your employer didn't reimburse you but should have, keep the documentation and consider asking for reimbursement before tax time.