What actually changes your refund amount

Your refund gets bigger when you pay more tax during the year than you owe, or when you claim deductions and credits the IRS allows. The gap between what you paid and what you actually owe is what comes back to you. You cannot manufacture a refund out of nothing — the IRS will not send you money you did not overpay — but you can reduce what you owe, which means more of what you already paid comes back.

The two main levers are withholding (how much your employer takes from each paycheck) and deductions and credits (reductions to your taxable income or tax bill). Changing your withholding takes time and planning. Deductions and credits are things you claim on your return itself, and they are where most people find money they did not know they had.

Key Takeaways

  • Adjusting your W-4 with your employer can lower your withholding and increase your refund next year, but changes take weeks to show up in your paychecks.
  • Claiming deductions you missed — mortgage interest, property taxes, charitable donations, student loan interest — can reduce your taxable income and raise your refund immediately on this year's return.
  • Tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit reduce your tax bill dollar-for-dollar and often produce refunds larger than the tax you paid.
  • Bunching deductions into one year by paying property taxes or charitable gifts in December rather than January can push you over the standard deduction threshold.
  • Self-employed people and gig workers can deduct home office, vehicle, equipment, and supplies expenses that W-2 employees cannot claim.

Deductions you might have missed

Most people take the standard deduction — a flat amount the IRS lets you subtract from your income with no paperwork. For 2024, that is $14,600 for single filers and $29,200 for married filing jointly. If you have deductible expenses that add up to more than that, itemizing instead of taking the standard deduction will lower your taxable income and raise your refund.

Common deductions that people overlook: mortgage interest (not the principal), property taxes paid to your state or county, state and local income taxes (capped at $10,000 combined), charitable donations to may have access to organizations, medical expenses above 7.5% of your adjusted gross income, and student loan interest up to $2,500. If you own a home, paid property tax, or gave to charity, add those up. If the total exceeds the standard deduction for your filing status, you should itemize on Schedule A.

Keep receipts and bank statements for anything you claim. The IRS does not ask for them when you file, but if you are audited, you will need proof that the expense was real and that you actually paid it.

Tax credits that reduce your bill directly

A tax credit is different from a deduction. A deduction reduces your taxable income. A credit reduces your tax bill itself, dollar for dollar. A $1,000 credit saves you $1,000 in tax. Many credits are refundable, which means if the credit is larger than the tax you owe, the IRS sends you the difference.

The Earned Income Tax Credit (EITC) is the largest refundable credit for working people with low to moderate income. For 2024, the maximum credit ranges from $600 to $3,995 depending on your income and whether you have children. You must have earned income (wages, self-employment, or gig work) to claim it. Many people who may have access to do not claim it because they do not know it exists or think they earn too much. The IRS has a tool on irs.gov to check if you may have access to.

The Child Tax Credit is $2,000 per child under 17. It is partially refundable — you can get up to $1,700 back even if you owe no tax. The Child and Dependent Care Credit covers daycare or summer camp expenses if you paid for care so you could work. The American Opportunity Tax Credit is up to $2,500 per student for college tuition and fees. The Lifetime Learning Credit is up to $2,000 for other education expenses.

Adjusting your withholding for next year

If you got a large refund this year, it means your employer withheld too much tax from your paychecks. You lent the government money interest-free all year and got it back in April. To stop that, you can adjust your W-4 — the form you filled out when you started your job that tells your employer how much to withhold.

The more allowances or adjustments you claim on your W-4, the less your employer withholds. The fewer you claim, the more they withhold. If you want a smaller refund next year (and more money in each paycheck), you can increase your allowances. If you want a larger refund, you can decrease them. You can change your W-4 at any time by talking to your HR or payroll department. The change usually takes effect within one or two pay periods.

Be careful not to under-withhold too much. If you do not have enough tax withheld during the year, you may owe money when you file, and you may face a penalty. The IRS has a withholding calculator on irs.gov that estimates how much you should have withheld based on your income, filing status, and other factors.

Self-employment and business deductions

If you are self-employed, a freelancer, or run a side business, you can deduct expenses that W-2 employees cannot. These include a portion of your home office (square footage of your office divided by total square footage of your home, times your rent or mortgage interest and utilities), vehicle mileage for business (the standard mileage rate is set by the IRS each year — 67 cents per mile for 2024), equipment and supplies, software subscriptions, professional fees, and health insurance premiums you pay yourself.

You report business income and expenses on Schedule C (Profit or Loss from Business). Your net profit or loss then flows to your main tax return. If your business loses money, that loss can offset other income you have, which lowers your overall tax bill and raises your refund. Keep records of all business expenses — receipts, invoices, mileage logs, bank statements — for at least three years.

Bunching deductions into one year

If you are close to the standard deduction threshold but not quite over it, you can bunch deductible expenses into a single year to itemize that year and take the standard deduction the next year. For example, if you usually pay $8,000 in property taxes and $2,000 in charitable donations each year (totaling $10,000, just under the $14,600 standard deduction for single filers), you could pay both your January property tax bill and your December property tax bill in December of the same year, plus make your charitable donations in December. That year you would have $20,000 in deductions and would itemize. The next year you would take the standard deduction.

This strategy works best if you have flexibility over when you pay certain bills — property taxes, charitable donations, and medical procedures are common candidates. It does not work for expenses you cannot control, like mortgage interest (which is tied to your loan) or state income tax withholding (which your employer controls).

Frequently Asked Questions

Can I claim a deduction if I do not have a receipt?

The IRS does not require you to attach receipts to your return, but you must keep them for your records. If you are audited and cannot produce proof of an expense, the IRS will disallow it. For charitable donations over $250, you need a written acknowledgment from the charity. For other deductions, bank statements, credit card statements, or invoices can serve as proof.

What is the difference between the standard deduction and itemizing?

The standard deduction is a flat amount everyone can take with no paperwork. Itemizing means listing your actual deductible expenses on Schedule A. You choose whichever is larger. Most people take the standard deduction because their expenses do not add up to more than it.

If I get a refund, does that mean I overpaid my taxes?

Yes. A refund means you paid more tax during the year (through withholding or estimated payments) than you actually owed. The IRS is returning the overpayment. It is not a bonus or extra money — it is your own money coming back.

Can I claim the Child Tax Credit if my child does not have a Social Security number?

No. You must provide a valid Social Security number or Individual Taxpayer Identification Number (ITIN) for each child you claim. If your child does not have one, you can request an ITIN from the IRS using Form W-7.

How long does it take for a change to my W-4 to show up in my paycheck?

Usually one to two pay periods. Your employer processes the new W-4 and applies it to the next payroll run after they receive it. If you change your W-4 mid-month, the change might not appear until the following pay period.