As tax season approaches, the question on everyone’s mind is: “What will be my tax return?” While the term “tax return” refers to the paperwork you file, most people are actually asking, “How much of a refund will I get back?”
Estimating your tax refund doesn’t have to be a mystery. By understanding a few key variables—your income, deductions, and credits—you can get a very close estimate before you even open your filing software.
1. Understand the Basic Formula
To determine your refund, you need to understand the relationship between what you owe and what you’ve already paid. The basic math is:
(Total Tax Liability) – (Tax Payments & Credits) = Your Refund (or Amount Owed)
If you paid more throughout the year (via withholding from your paycheck) than your actual tax liability, the IRS sends you the difference as a refund.
2. Gather Your Income Documents
Your tax return starts with your Gross Income. You’ll need to collect:
- W-2s: From your employer(s).
- 1099-NEC/K: For freelance or gig work.
- 1099-INT/DIV: For interest and investment income.
- Other Income: Such as unemployment benefits or gambling winnings.
3. Determine Your Filing Status
Your filing status significantly impacts your “Standard Deduction.” The higher your deduction, the lower your taxable income. For the 2023/2024 tax years, the standard deductions are:
- Single: $13,850 / $14,600
- Married Filing Jointly: $27,700 / $29,200
- Head of Household: $20,800 / $21,900
4. Deductions vs. Credits: Know the Difference
This is where many people get confused. Both lower your tax bill, but in different ways:
- Tax Deductions: These lower the amount of income you are taxed on. If you have significant mortgage interest or medical expenses, you might choose to itemize instead of taking the standard deduction.
- Tax Credits: These are “dollar-for-dollar” subtractions from your actual tax bill. Common credits include the Child Tax Credit, the Earned Income Tax Credit (EITC), and education credits like the AOTC.
5. Check Your Withholding
Look at Box 2 of your W-2 form. This shows how much federal income tax was withheld from your paychecks during the year.
- If Box 2 is higher than the tax calculated on your taxable income (after credits), you are getting a refund.
- If Box 2 is lower, you will likely owe money to the IRS.
6. Use an Online Tax Calculator
If you want a quick estimate without doing the manual math, several reputable companies offer free tax refund calculators:
- IRS Tax Withholding Estimator: Best for checking if you need to adjust your W-4.
- TurboTax or H&R Block Calculators: Excellent for a quick “snapshot” of your potential refund based on basic entries.
How to Get a Bigger Refund Next Year
If your refund was smaller than expected, you can influence next year’s outcome by:
- Adjusting your W-4: Ask your employer to withhold more money if you prefer a large lump sum in the spring.
- Contributing to a Traditional IRA or 401(k): These contributions lower your taxable income.
- Keeping track of receipts: If you are self-employed, every business expense lowers your tax liability.
Summary
To answer “What will be my tax return?”, you must compare your total tax bill against the amount withheld from your checks. If you had a major life change this year—like getting married, having a child, or starting a business—your refund could look very different from last year.
Disclaimer: This article provides general information and should not be considered professional tax advice. For specific questions regarding your taxes, please consult a certified tax professional or the IRS website.
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