It is necessary that you make sure that you plan properly whenever you are after a bigger tax refund. It is important that you make sure that your filing is done properly. You will realize that tax refunds will only come about in given circumstances. However there are a number of common factors that affect the tax refund. They include the following.
Your gross yearly income is what we look at first. You will note that you owe the government between ten and just about forty percent of your yearly income as tax. You will find that you will be taxed more as your income increases. Total earnings will often encompass all sources through which you gain income. This will in most cases consist of wages as well as tips. You will also realize that there are federal taxes that are withheld too. These are usually estimates of what you need to cover as your tax at the end of the year. You are free to allow for the estimates to be deducted at the end of each quarter of the year. It is important to keep in mind the fact that a tax refund will only come about if there is an overpayment in these estimates. It is therefore important that you make sure that you follow up on the precision of the information that you provide.
You will realize that your personal allowances will have a say on the kind of tax refund you will receive in the long run. The number of allowances that you will indicate or rather claim will define the amount of income that will be held back for federal taxes. This will finally have an impact on the kind of tax refund that you will be entitled to at the end of the day. If you do claim nil exemptions each passing month and hence getting a lesser, you are more likely to get a higher amount as a tax refund. The filing status also matters a lot. There are times when married people have to file their tax returns separately. This is because it may result in a higher tax refund.
The number of dependents plays a significant role in determining the amount of tax refund. An increase in the number of dependents does bring down the amount you owe as tax. Credits and even deduction matter a lot too. They will actually maximize your tax refund. They will take into consideration credits for things like home improvements and even higher education. In the event that you do contribute to your retirement plan, there is a bigger chance of getting a more favorable tax refund.