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What are Some Factors that Will Affect the Size of Your Tax Refund

What are Some Factors that Will Affect the Size of Your Tax Refund?

Brookline, NH Resident Looks for Answers to This Question

There are many factors that can affect the size of your tax refund from year to year. These include life events, such as your marital status, the number of children you have, and significant life changes that may qualify you for tax credits. Your filing status, whether filing jointly, single, or as head of household can also impact the size of your tax return. Whether you take the standard deduction or itemized deductions can also impact the amount of money you receive back from the IRS. Of course, your income and the amount of taxes that you have paid throughout the year will be a big factor.

A Brookline resident was concerned that his tax return was significantly smaller than the previous year. Wondering what might have changed, he contacted the team at Merrimack Tax Associates for advice.

Tax Bracket Changes and Your Income Can Have an Impact

Each year the IRS releases updated tax brackets, adjusting the amount of taxes you will pay on your income. Significant changes to these brackets or a big change in your household income can show itself as a difference in the size of your tax return. In addition, any deductions that you may have taken in the past but are no longer eligible for can make a sizable difference.

Starting a New Job and Not Having Enough Taxes Withheld Can Diminish a Tax Refund

When filling out a W2 form upon starting a new job you will determine how much tax is withheld from each paycheck. This is based on the number of dependents that you specify, the higher the number the less taxes will be taken out. If you started a new job and there was a discrepancy on the W2 from your previous position, this can make a big difference in the amount of taxes taken from you paycheck throughout the year. You will likely discover this, possibly in the form of a deficit, when you go to file your taxes.

After talking to the Merrimack Tax Associates team, the Brookline resident discovered the discrepancy was in his tax withholdings after starting a new job at the beginning of the year. His new employer was not withholding enough tax from his paycheck. After finding this out, he has now made the necessary changes to ensure that enough taxes are being withheld to prevent a surprise bill at the end of the year.

income tax, tax refund, tax withholdings, taxes