Do you want to know what the biggest tax return ever is? In my experience, the largest tax refund request was for $94 million.
However, as you continue reading, I will provide additional information regarding the strategies employed by small business owners and freelancers to reduce their tax liability and the largest tax return ever requested.
ALSO READ – How Can I Get The Largest Tax Return
Now, let’s get started.
What Is The Largest Tax Refund You’ve Ever Gotten
I have gotten a maximum of around four thousand dollars in government refunds. Filed jointly, with two children, and no earned income credit.
The latter is a significant factor for many young families; a low income combined with a greater number of children equals a higher EIC.
Despite the fact that our family’s income is more than the limit, I have witnessed refunds of nine thousand to ten thousand dollars for families with lesser incomes (between twenty-four thousand and thirty-five thousand AGI). When income increases, EIC decreases.
What Is The Largest Income Tax Refund Ever
here is a true story: a woman from Georgia submitted a $94 MILLION tax refund in what may be the greatest tax maneuver ever!
With Georgia’s 6% state income tax rate, one must earn more than $1.6 billion in revenue in order to pay $94 million in taxes.
Yes, it is possible to make more than $1.6 billion, but this woman is probably someone else.
How in the world did she become discovered, pray tell? Investigators invited the lady to pick up her $94 million refund cheque at the grocery store. That’s when her arrest occurred.
The woman allegedly continuously contacted the Georgia tax department to inquire about the timing of her tax refund.
I wouldn’t be able to control myself either if I had truly expected to get a cheque that large!
However, a more astute individual would have paid a $500,000 imposter to accept the cheque in her place and bounce it.
After all, what’s spending 0.5% of your tax refund to increase your chances of avoiding detection by a significant margin?
ALSO READ – What Happens If You Write Off Too Much On Taxes
What Gets You The Biggest Tax Return
These six suggestions can help you get a bigger tax refund and pay less in taxes.
1. Attempt to itemize your deductions.
You may benefit from itemizing your deductions if you have significant costs to deduct, such as mortgage interest, medical bills, and charitable donations, even though the majority of taxpayers utilize standard deductions depending on their filing status
Only when your total deductions exceed your standard deduction is it worthwhile to itemize.
2. Verify Your Filing Status Again
Consider your alternatives if you’re single with qualifying dependents or married filing separately or jointly, even if you can’t file as married if you’re single or vice versa.
Head of household filers is a single individual who gets more than half of their support from the taxpayer and who has qualifying children or other dependents (like aging parents) living with them for at least half of the year.
Head-of-household filers benefit from higher tax brackets and a larger standard deduction ($19,400 against $12,950 in 2022) than do single filers.
If one spouse earns much less than the other and is eligible for benefits, like the child tax credit, if their income were taken into account separately, married couples may want to consider filing separately.
To find out which filing status saves you the most money, you can compute your taxes both ways, as filing separately prevents you from being eligible for several additional credits and deductions.
3. Pay Into Your Retirement.
Conventional 401(k), 403(b), and other employer-sponsored plan contributions, as well as conventional IRA contributions, are tax deductible in the year of contribution.
Generally, IRA contributions are due by the deadline for filing taxes unless an extension is granted. The deadline is April 18, 2023, for paying your taxes for 2022.
For the 2022 fiscal year, the maximum amount you may put into a 401(k) or 403(b) plan, as well as other employer-sponsored retirement programs, is $20,500. If you are 50 years of age or older, you can additionally make a catch-up contribution of $6,500.
A $1,000 catch-up contribution is also available to those 50 years of age or older for a total contribution to an IRA of up to $6,000.
If you surpass specific income thresholds and have an employer-sponsored plan at work, your IRA contribution deductions may phase out.
If you have a Roth IRA or Roth 401(k), you may take advantage of tax-free eligible withdrawals from the account when you retire, but contributions to these accounts are not tax deductible.
4. File a Tax Credit Claim
Even though many of the tax benefits that were extended during the COVID-19 epidemic have expired, eligible taxpayers can still claim several credits that would reduce their tax liability dollar for dollar.
5. Fund Your Healthcare Savings Account
Your health savings account (HSA) contributions are tax deductible. For 2022, individual taxpayers can contribute up to $3,650 to an HSA, plus an extra $1,000 if they are 55 years of age or older. A family may donate up to $7,300.
According to the IRS, in order to qualify for an HSA, a high-deductible health plan must have an annual minimum deductible of $1,400 or more for single people and $2,800 or more for families.
6. Consult an Expert on Taxes
Understanding the U.S. Tax Code from top to bottom is a full-time job. You may prepare for the upcoming tax year, determine your filing status and eligible dependents, and locate all of your potential credits and deductions with the assistance of a knowledgeable tax expert.
The knowledge of a tax specialist might be invaluable if you have any assets that could complicate your tax return, such as inheritances, side businesses, or investment income.
ALSO READ – What Is A 20% Tax Write-Off
How Much Are Most Tax Refunds
The annual average tax refund
The IRS filing season figures show that for the previous five years, the average tax refunds have been:
- $2,753 for tax year 2022.
- $3,012 in tax year 2021.
- 2020 tax year: $2,865.
- 2019 tax year: $2,781.
- 2018 tax year: $2,729.
It should be noted that tax discounts connected to pandemic relief in 2021 resulted in bigger tax refunds in 2021.
The filing-season statistics report as of the April tax deadline is the other problem.
They exclude the amount that is ultimately distributed to taxpayers who request tax extensions; as a result, refunds are only issued beyond the October 15 tax extension deadline.
The entire set of data from the IRS’s IRS’s Statistics of Income (SOI) shows that, on average, the final tax refund is higher.
Which State Gives The Biggest Tax Return
The States With the Biggest Tax Refunds are As follows:
1. Utah
In 2021, Utah received an average federal tax return of $1,812. Given that Utah had the largest average family size of any state in 2021—5.4 million tax refunds—it it’s possible that the typical household in the state profited from increased child tax credits.
2. Colorado
The first state without a state income tax on the list is Wyoming. In 2021, the typical federal tax refund was $1,802.
Only around one million federal tax returns were used to determine this. Out of all the states, the state issued the fewest tax refunds in 2021.
3. Texas
Another state without a state income tax is Texas. In 2021, residents ‘average federal tax refund was $1,783.
Texas was the second-highest state in terms of overall return funds, coming in at around $94 billion; only California received more.
4. Dakota
With an average federal tax refund of $1,750 in 2021, North Dakota ranks fourth. There were about 1.4 million returns from the government. The average return for state and local taxes is $820, which is less than half of the federal amount.
5. Illinois,
Illinois is in fifth place with a $1,739 average federal refund. Out of all the states in 2020, Illinois also had the second-lowest average state and local tax refund. It was only $581. PA was the only state with a lower average refund ($534).
6. The state of Alaska
Third on the list of states without a state income tax is Alaska. In 2021, it was refunded an average of $1,734. During that tax year, the federal government issued nearly 1.3 million refunds.
7. Kansas
Kansas ranks eighth, with an average federal tax refund of $1,728—just behind Alaska. Taxpayers in Kansas received more than 5 million in refunds in 2021.
8. Dakota
The final state in the top 10 without a state income tax is South Dakota. With 1.6 million refunds, the state came in fourth place overall in 2021, after North Dakota, Wyoming, and the District of Columbia. $1,721 was the average federal tax refund.
9. Nebraska
With an average federal tax refund of $1,716 in 2021, Nebraska ranks ninth. More than 3.4 million reimbursements were sent during that year, which was used to compute this.
10. The state of Oklahoma
With an average federal refund of $1,715—just $1 less than Nebraska and $3 more than a three-way tie for eleventh place between New York, Tennessee, and New Jersey—Oklahoma completes the top ten list.
Why Do I Get A Tax Refund
The majority of firms are obligated to deduct income taxes from employee paychecks. A tax refund occurs when the total amount withdrawn from an employee’s salary over the year surpasses the amount of taxes owed.
Employers use withholding tables to determine how much tax to deduct from an employee’s paycheck; these tables also determine how much is withheld by employers and sent to the Internal Revenue Service (IRS) for each payment.
By completing the W-4 form, which asks about their filing status, dependents, tax deductions, and other information that may impact their tax liability, employees help with this process.
The regularity of paychecks, the W-4 form, and salary all affect how much is withheld in taxes. Workers can also fine-tune how much they want to withhold when estimating their responsibility at year’s end.
When filing taxes, this results in three possible outcomes:
Precise withholding: the amount deducted from the employee’s salary corresponds to the amount of taxes they owe; thus, they neither receive a refund nor incur tax obligations upon filing.
Under withholding: When an employee files their taxes, there is a balance payable because the amount withheld from their paychecks was insufficient to cover their tax liability. Depending on the amount outstanding, that can result in underpayment penalties.
Over withholding: When an employee files, they receive a return (interest-free) if more money is withheld from their paychecks than they owe in taxes.
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Final Thought
Now that we have established the biggest tax return ever, changing your withholding is one strategy to boost your return the next year.
You may boost your chances of receiving a larger return by increasing the amount you pay during the year by adding more to your tax bill with each payday.
But be aware that the majority of tax professionals advise against budgeting for a sizable refund.
By doing this, you are effectively giving the federal government a free loan on funds that you should be saving and investing for yourself.
However, a lot of taxpayers look forward to their tax refund. It might seem like a gift for filing your taxes, and it is an easy, automated method to save money.
When tax season rolls around, concentrate on obtaining the largest possible refund—the more, the better.