A tax refund is money the government owes you because you paid too much tax during the year

Your refund size depends on three things: how much tax your employer withheld from your paychecks, how much tax you actually owed based on your income and deductions, and whether you claimed all the deductions and credits you were may have access to to. The gap between what you paid and what you owed is your refund. You cannot create a refund that does not exist, but you can make sure you are not leaving money on the table by missing deductions or credits you may have access to for.

The most common reason people get smaller refunds than they should is that they do not claim all available deductions or credits. A second reason is that they do not adjust their withholding when their life changes — marriage, a second job, a child, or a major purchase like a house. A third is that they miss income sources the IRS knows about but they did not report, which triggers a smaller refund or a bill instead.

Key Takeaways

  • Claiming every deduction and credit you may have access to for — including the Earned Income Tax Credit if your income is below the threshold — is the single biggest way to increase your refund.
  • If you are self-employed or have side income, you can deduct business expenses like equipment, mileage, and home office costs, which many people miss.
  • Adjusting your W-4 withholding during the year (not just at tax time) means you keep more money in each paycheck instead of waiting for a refund.
  • Reporting all income sources — including 1099 forms from side work, interest, and dividends — prevents the IRS from reducing your refund or sending you a bill.
  • Using tax software or a preparer who knows your full situation catches deductions you might overlook on your own.

Claim every deduction and credit that matches your situation

The Earned Income Tax Credit (EITC) is the largest refund boost for people earning under roughly $60,000 a year, depending on filing status and number of children. If you have children, you also may have access to for the Child Tax Credit (up to $2,000 per child under 17) and the Child and Dependent Care Credit if you paid for childcare so you could work. These are not optional — if you meet the income and family requirements, you should claim them.

Beyond family credits, look at your actual expenses. If you own a home, you can deduct mortgage interest and property taxes (up to $10,000 combined in most states). If you gave money to charity, you can deduct those donations if you itemize. If you paid student loan interest, you can deduct up to $2,500. If you are self-employed, you can deduct a portion of your health insurance premiums, half of your self-employment tax, and a home office if you have a dedicated workspace.

The catch: you can only deduct these if you itemize or if they are "above the line" deductions. Most people take the standard deduction instead, which is simpler but means you do not get the benefit of individual deductions. Run the math both ways — itemized versus standard — to see which gives you a larger deduction. Tax software does this automatically.

Report all income, including side work and investments

The IRS receives copies of 1099 forms from employers, banks, investment firms, and payment platforms like PayPal and Stripe. If you do not report this income on your tax return, the IRS will notice the mismatch and either reduce your refund or send you a bill with penalties. This is one of the most common reasons refunds shrink after filing.

Side income from freelance work, gig economy jobs, rental property, or selling items online all count. Interest from savings accounts, dividends from stocks, and capital gains from selling investments all count. If you received a 1099-NEC, 1099-MISC, 1099-K, or 1099-INT, report it. If you are not sure whether you received a form, log into your IRS account at irs.gov or ask the payer directly.

Once you report the income, you can deduct the expenses that go with it. If you earned $5,000 from freelance writing but spent $800 on software and equipment, you report $5,000 in income and deduct $800 in expenses, so your taxable income from that work is $4,200. Many people report the income but forget the deductions, which inflates their tax bill and shrinks their refund.

Deduct business expenses if you have self-employment or side income

Self-employed people and side hustlers can deduct expenses directly related to earning that income. Common ones include equipment and supplies, software subscriptions, vehicle mileage (at the IRS rate, currently 67 cents per mile for business use), home office rent (if you have a dedicated space), internet and phone bills (the business portion), and professional development like courses or certifications.

Keep records of what you spend: receipts, invoices, mileage logs, and bank statements. The IRS does not ask for these when you file, but you need them if you are audited. If you use your car for business, track miles in a log or use an app — the IRS is strict about this one. If you use part of your home as an office, measure the square footage and calculate the percentage of your rent or mortgage and utilities you can deduct.

Many side hustlers leave money on the table by not deducting these expenses. If you earned $10,000 from a side business but spent $3,000 on legitimate expenses and did not deduct them, you paid tax on $10,000 when you should have paid tax on $7,000. That is a significant refund you did not get.

Adjust your W-4 withholding if your situation changed

Your W-4 tells your employer how much tax to withhold from each paycheck. If you get a large refund every year, you are having too much withheld — which means you are giving the government an interest-free loan all year instead of keeping that money in your paycheck. If you get a bill at tax time, you are having too little withheld.

You can adjust your W-4 any time during the year, not just when you start a job. If you got married, had a child, bought a house, started a second job, or your spouse started working, your withholding probably needs to change. The IRS has a W-4 calculator on irs.gov that walks you through the math based on your current situation. Fill it out, give the results to your employer's payroll department, and your withholding adjusts on the next paycheck.

This is not about maximizing your refund — it is about not overpaying in the first place. A smaller refund that comes from keeping more money in your paychecks throughout the year is better than a large refund that comes from the government holding your money for months. But if you prefer a refund, understanding your withholding helps you plan for it.

Use tax software or a preparer who knows your full situation

Tax software like TurboTax, H&R Block, and TaxAct walk you through questions about your income, deductions, and credits. They catch many deductions automatically — if you report mortgage interest, the software reminds you that you can deduct property taxes. If you report self-employment income, it calculates your self-employment tax and the deduction you get for half of it. If you have a child, it checks whether you may have access to for the EITC.

A tax preparer or CPA is worth the cost if your situation is complex: you have multiple income sources, own a business, have rental property, or made large charitable donations. They know deductions specific to your industry or situation that software might not prompt you about. They also keep records of what you claimed last year, so they can spot changes that might trigger an audit.

Whether you use software or a preparer, the key is giving them complete information. If you hide income or expenses, or if you do not mention a major life change, they cannot help you. Be honest about what you earned and spent, and let them do the work of finding deductions you may have access to for.

Double-check that you reported all income sources before you file

Before you submit your return, make a list of every income source you had during the year: W-2 wages, 1099 income, interest, dividends, capital gains, rental income, and anything else. Check it against the 1099 forms and other documents you received. If you are missing a form, contact the payer and ask them to send it or resend it.

The IRS matches your return against the forms it receives. If you report $50,000 in W-2 income but the IRS has a 1099-INT for $500 in interest that you did not report, the IRS will send you a notice asking about it. You will owe tax on that $500 plus penalties and interest. It is easier to report it correctly the first time.

This is also the moment to verify that the amounts on your forms are correct. If a 1099 shows $5,000 but you only earned $4,500, contact the payer and ask for a corrected form. Do not just report what the form says if you know it is wrong.

Frequently Asked Questions

Can I get a bigger refund by claiming dependents I do not have?

No. The IRS requires a valid Social Security number for each dependent you claim, and it cross-checks these against Social Security records. Claiming a dependent you do not have is tax fraud and triggers penalties, interest, and potential criminal charges. Only claim dependents who actually lived with you and met the IRS requirements.

What if I forgot to claim a deduction on my return?

You can file an amended return using Form 1040-X within three years of the original filing date. If the deduction increases your refund, you will get the additional money. If it reduces your refund or creates a bill, you will owe it. It is worth doing if the deduction is large enough to matter.

Does getting a bigger refund mean I am doing taxes right?

Not necessarily. A large refund means you overpaid during the year. A smaller refund or a small bill means your withholding was closer to what you actually owed. The goal is to break even or owe a small amount, so you are not giving the government an interest-free loan. Adjust your W-4 to get there.

Should I claim the standard deduction or itemize?

Run the math both ways using tax software or a calculator. Add up all your itemized deductions (mortgage interest, property taxes, charitable donations, medical expenses above 7.5% of income). If that total is higher than the standard deduction for your filing status, itemize. Otherwise, take the standard deduction. Most people benefit from the standard deduction.

What if I owe money instead of getting a refund?

You can pay in full by the tax important date, set up a payment plan with the IRS, or request a short-term extension to pay. The IRS charges interest and penalties on unpaid tax, so paying as soon as you can costs less. If you owe every year, adjust your W-4 to have more tax withheld so you do not face a bill next time.