How many exemptions do I claim to get the max refund?

[Crystal924]

Hi there, 

I am single with one child, and starting a new job making 70K. I have noticed my return drop significantly as I have finished school and made more money. Please help me understand where I am messing up or how to file so that I am increasing my refund. I have only been claiming 1 exemption for "self" and not seeing even 3k of a return. 

Where does the tax bracket change income-wise?  

[VolvoGirl]

I'm married and When I worked I claimed Single 0 to have the most taken out.  Actually you should not plan or count on getting a big refund.  It is not like a savings account.   You should try to come out even at the end of the year.   You don't owe the IRS and they don't owe you.   Why let them hold your money all year?

[Akil C]

Hi Crystal,

Thanks for your question and congratulations on finishing college!!! VolvoGirl is spot on in saying that if you want the maximum refund you should claim zero exemptions. With your income increasing significantly since graduating, you may have out-earned yourself out of the Earned Income Credit eligibility. The EIC can increase your refund by up to $3,526 but it phases out completely at around $41,000. 

VolvoGirl is also correct in explaining that getting a larger refund at the end of the year only means that you get paid less in each paycheck. However, many taxpayers like the discipline of getting a large tax refund because they can't touch it like you could if it were in a savings account.  And since savings account rates are so so low right now, it actually may be a good idea to let Uncle Sam hold your money for you, if it means you won't spend it. 

Per your request, here is a TurboTax link with the 2020-2021 marginal tax rates that show you the cut-offs. You'll want to look at the Head of Household rates. Here are some other TurboTax Calculators you may find helpful:

• Tax Bracket Calculator
• TurboTax TaxCaster Calculator -  Estimate your 2021 refund. Even though it says 2020, it will be a very good approximation for 2021. 

These tools will help you plan better in order to obtain the refund you desire. 

Thanks!

Akil C.