Tax Refunds Are Down Almost $400 So Far This Year Compared to 2022. Here’s How to Eke Out a Higher One

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There’s still time to boost your tax refund. 

It’s easy to argue that a large tax refund is not a good thing. That’s because a refund represents money you were entitled to collect earlier on but didn’t. But even though tax-filers are often told that they shouldn’t want a large refund, most people would rather see the IRS put more money into their bank accounts during tax season than less.

Meanwhile, tax refunds are down so far this year compared to last year. For the week ending March 17, the average tax refund paid by the IRS was $2,933, compared to $3,305 a year prior.

Now there’s an easy explanation for that. In 2021, a number of tax credits got a big boost, including the Child Tax Credit. That gave tax refunds a lift in 2022. But those pandemic-era benefits have since expired, so now, those doing their tax returns can’t benefit from them in the context of their 2022 taxes.

If you’re doing your taxes and aren’t happy with the refund you’re looking at, you should know that you still have options for eking out a higher one. Here’s how.

Max out your 2022 IRA

In 2022, IRA account contribution limits maxed out at $6,000 for workers under age 50, and $7,000 for those 50 and over. If you put in less, the good news is that there’s still time to finish funding your 2022 IRA. You actually have until this year’s April 18 tax-filing deadline to pump more money into your account, so if you have the money and are able to move it over, you might score some added tax savings.

Make sure you’re getting all of the credits and deductions you’re eligible for

The U.S. tax code is loaded with tax credits and deductions that could boost your refund — but the key is to make certain you’re claiming all of the benefits you can. And a good way to know is to hire a tax professional to complete your return. You might spend a few hundred dollars to do so, but in exchange, that person might score you a higher refund that not only pays for their fee, but leaves you coming out ahead financially.

If you don’t want to use a tax preparer for your 2022 return, think about your situation. If you’re a parent, read up on tax credits for kids, like the Child Tax Credit and the Child and Dependent Care Credit. And if you’re self-employed in any capacity (including having taken on a side hustle in 2022), then research different deductions you might be able to claim, like travel costs and the cost of supplies and equipment. You may also be eligible for a home office deduction if you’re self-employed.

It’s not surprising to see that tax refunds are down this year. But you don’t have to settle for a smaller refund, either. So before you submit your 2022 tax return, look into different credits and deductions and see about maxing out last year’s IRA. The latter could not only boost your refund, but also, set you up with a larger nest egg for retirement.

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