Updated: Aug 15, 2025

Tax season can be stressful, but it can also be an opportunity. With the right planning, you can make sure you’re getting back as much money as possible—or at least keeping more of what you earned.

Why Tax Refunds Matter

For many people, a tax refund is the biggest lump sum of money they’ll receive all year. It can help catch up on bills, pay down debt, buy essentials, or jumpstart savings. But if you don’t understand how taxes work, you might miss out on money that’s rightfully yours.

Tax refunds happen when you’ve paid more in taxes during the year than you actually owe. This can come from job withholdings, estimated payments, or refundable tax credits. The key to maximizing your refund is to make sure you’re claiming every credit and deduction you qualify for—and avoiding simple mistakes that could delay your return or reduce your refund.

File Early and Electronically

One of the best ways to get your refund quickly is to file your return as soon as you have your documents and file electronically. E-filing is faster, more accurate, and helps avoid common math errors that can trigger delays.

If you’re due a refund and file electronically with direct deposit, you can usually get your money within 21 days. Paper returns take longer to process and are more likely to be flagged for manual review.

Make sure you have all your forms before filing—including your W-2s, 1099s, and any other income statements. If you file too early and leave something out, you might have to amend your return later, which slows everything down.

Choose Direct Deposit

The IRS issues refunds faster when you choose direct deposit instead of waiting for a paper check. You can even split your refund between multiple accounts to build savings while still covering expenses.

If you don’t have a traditional bank account, many prepaid debit cards and mobile banking apps accept direct deposit. Just be sure to double-check your account and routing numbers to avoid errors.

For more details on how to set it up, visit irs.gov/refunds.

Claim Every Credit You Qualify For

Tax credits reduce your tax bill dollar-for-dollar—and some are refundable, meaning you get money back even if you owe nothing in taxes. These are some of the most valuable credits to look for:

Earned Income Tax Credit (EITC)
Designed for low- to moderate-income workers, the EITC can be worth up to $7,000 for families with multiple children. Even individuals with no kids may qualify for smaller amounts. The exact amount depends on your income, filing status, and number of dependents.

You must have earned income from a job or self-employment to qualify. Visit irs.gov/eitc to check eligibility.

Child Tax Credit (CTC)
Families can get up to $2,000 per qualifying child under age 17, with a portion being refundable. If your income is under a certain threshold, you may qualify for the full amount.

Child and Dependent Care Credit
If you paid for daycare, after-school care, or summer camps while working or looking for work, you could receive a credit worth a percentage of those expenses. The credit can apply to children under age 13 or a disabled spouse or dependent.

American Opportunity Tax Credit (AOTC)
This credit is for college students and can be worth up to $2,500 per year for the first four years of higher education. If you or your dependent were enrolled at least half-time, you may qualify—even if you paid with student loans or financial aid.

Saver’s Credit
If you contributed to a retirement account like a 401(k) or IRA and your income is within certain limits, you could receive a credit worth up to $1,000. This credit is often overlooked but can be a nice bonus for low- and moderate-income savers.

Don’t Forget About Deductions

While credits reduce the amount of tax you owe, deductions reduce the amount of income that gets taxed. Many people use the standard deduction, which is automatic and usually the best option unless you have a lot of expenses to itemize.

But even with the standard deduction, there are still “above-the-line” deductions you can take:

• Student loan interest (up to $2,500)

• Educator expenses if you’re a teacher

• IRA contributions

• Self-employment expenses

• Health Savings Account (HSA) contributions

Each of these can lower your taxable income, helping you qualify for bigger credits or refunds.

Use Free Filing Tools

You don’t need to pay for expensive tax software or services to file your taxes. Many people qualify for free federal tax filing through the IRS Free File program, available at irs.gov/freefile.

If your income is below a certain level (usually $73,000 or less), you can use brand-name software for free. Some options also offer free state filing.

You can also visit a local VITA (Volunteer Income Tax Assistance) site for in-person help. These programs are staffed by IRS-certified volunteers and provide free tax prep for people with low-to-moderate incomes, seniors, and people with disabilities. Find a site near you at irs.gov/vita.

Be Smart with Your Refund

Once your refund arrives, make a plan for how to use it. It’s tempting to splurge, but even small steps toward financial stability can go a long way.

Consider:

• Putting part of your refund in a savings account or emergency fund

• Paying down credit card debt or high-interest loans

• Catching up on rent or utility bills

• Pre-paying car insurance or other recurring expenses

• Buying things that save money over time, like bulk groceries or needed repairs

Even saving $100 from your refund can give you a cushion the next time something unexpected happens.

Watch Out for Scams and Fees

Tax time brings out scammers who promise fast refunds or charge hidden fees. Be cautious of anyone who guarantees you a certain refund or asks for payment upfront.

If you’re working with a tax preparer, make sure they’re certified and willing to sign your return. Avoid refund anticipation loans or services that charge to “advance” your refund—they usually come with high fees.

Stick with trusted resources and ask questions if something doesn’t feel right.

If You Owe Instead of Getting a Refund

Not everyone gets a refund. If you owe taxes, don’t panic. The IRS offers payment plans that let you pay over time, often with minimal fees. You can apply online at irs.gov/payments.

It’s always better to file your return on time—even if you can’t pay the full amount. The penalties for not filing are usually higher than the penalties for paying late.

If your balance is too large to manage, reach out to a certified tax advisor or nonprofit credit counselor to explore your options.

Final Thoughts

Maximizing your tax refund isn’t about gaming the system—it’s about understanding what you qualify for and filing your return carefully. From valuable credits to free filing options, the tools are out there to help you keep more of your money. Take your time, ask for help if you need it, and use your refund wisely to build toward your financial goals.