Your Tax Refund Could Be $1,000 Bigger Next Year — And Even More If You Make These Money Moves in Time
With the cost of living skyrocketing and many Americans feeling the pinch, a larger tax refund could be a welcome respite. In a bid to help alleviate financial burdens, the government has been working on tweaks to the tax code, which could result in bigger refunds for taxpayers come 2024.
As part of the ongoing efforts to provide relief to taxpayers, the Internal Revenue Service (IRS) has been making adjustments to the way it calculates tax refunds. One key change is the introduction of a more generous standard deduction, which could lead to increased refunds for many individuals.
A Closer Look at the Standard Deduction Increase
The standard deduction is the amount of income that is not subject to taxation. In 2023, the standard deduction for single filers was $13,850, while married couples filing jointly could deduct up to $27,700. For 2024, the IRS has announced an increase in the standard deduction to $15,700 for single filers and $31,500 for married couples filing jointly.
This increase could have a significant impact on tax refunds, particularly for those who previously itemized deductions. With the standard deduction now higher, fewer taxpayers may choose to itemize, resulting in a larger standard deduction and, subsequently, a bigger refund.
Maximizing Your Tax Refund: Smart Money Moves
While the increased standard deduction is a welcome development, there are other money moves that taxpayers can make to maximize their refund. One strategy is to contribute to a tax-advantaged retirement account, such as a 401(k) or an IRA. Contributions to these accounts are deductible, which can reduce taxable income and result in a larger refund.
Another way to boost your refund is to take advantage of tax credits, such as the Earned Income Tax Credit (EITC) or the Child Tax Credit. These credits can provide significant reductions in tax liability, leading to a bigger refund.
Tax Credits for Low-Income Families
The EITC is a refundable credit that is designed to help low-income working individuals and families. In 2024, the credit will increase to $555 for single filers with no children and $3,526 for families with three or more children. By taking advantage of the EITC, taxpayers can reduce their tax liability and potentially receive a larger refund.
The Importance of Tax Planning
While a larger tax refund can provide much-needed relief, it’s essential to remember that tax planning is an ongoing process. Taxpayers should review their financial situation regularly to ensure they are taking advantage of all available tax savings opportunities.
By making smart money moves and staying informed about tax changes, taxpayers can maximize their refund and enjoy a more stable financial future. As the IRS continues to make adjustments to the tax code, it’s crucial to stay ahead of the curve and take advantage of every opportunity to save on taxes.
What to Watch Next
In the coming months, taxpayers can expect further changes to the tax code, including updates to the standard deduction and tax credits. To stay informed and ensure they are taking advantage of every tax savings opportunity, taxpayers should:
- Review their financial situation regularly to identify areas for improvement
- Consult with a tax professional to ensure they are taking advantage of all available tax savings opportunities
- Stay up-to-date with the latest tax news and updates from the IRS
Conclusion
A larger tax refund can be a welcome respite for many Americans, particularly during times of financial uncertainty. By making smart money moves and staying informed about tax changes, taxpayers can maximize their refund and enjoy a more stable financial future. With the IRS continuing to make adjustments to the tax code, it’s essential to stay ahead of the curve and take advantage of every opportunity to save on taxes.
