Jan. 23, 2025

How Can Changing Your Filing Status Maximize Your Tax Refund?

Is Your Old Filing Status Stealing Your Tax Refund?

Welcome back to “Ask Ralph,” your daily dose of Christian financial wisdom! Today, we're diving deep into a question that could be impacting your wallet and your peace of mind: How Can Changing Your Filing Status Maximize Your Tax Refund?

Check out the full podcast episode:

Imagine this: You're expecting a nice tax refund, but when you finally receive it, it's much smaller than you anticipated. What went wrong? The culprit could be your filing status. It's easy to overlook this detail amidst the whirlwind of tax season, but choosing the wrong status can be a costly mistake, potentially leading to a smaller refund or even owing more taxes than necessary¹. As Christians, we are called to be good stewards of all that God has provided, and that includes being responsible with our taxes. In Matthew 25:14-30, Jesus shares the parable of the talents, reminding us that we are accountable for how we manage the resources entrusted to us. By understanding our filing status options and choosing wisely, we can ensure we're not leaving money on the table and are fulfilling our financial obligations.

Common Tax Filing Mistakes

Before we delve into filing statuses, let's review some common tax filing errors that can affect your refund. These include:

Missing or inaccurate Social Security numbers: Always double-check that all Social Security numbers on your return are correct and match the information on your Social Security card².
Misspelled names: Ensure all names on your return are spelled correctly and match the names on corresponding Social Security cards².
Incorrect bank account numbers: If you're expecting a direct deposit refund, ensure your bank account number is accurate to avoid delays².
Math mistakes: While tax software can help prevent calculation errors, it's crucial to review your return carefully before submitting it³.
Missing tax documents: Wait until you have received all necessary tax documents, such as W-2s and 1099s, before filing to avoid underreporting income⁴.
Overlooking potential tax breaks: Explore available deductions and credits to minimize your tax liability³.
Keeping inadequate records: Tax experts advise keeping thorough records throughout the year to support any deductions you claim. This includes receipts, invoices, and other documentation for expenses like charitable donations or medical costs⁵. As Proverbs 24:27 says, "Prepare your work outside; get everything ready for yourself in the field, and after that build your house." This principle of preparation applies to our finances as well.

How Filing Status Affects Your Tax Refund

Your filing status plays a significant role in determining your tax liability and refund. It affects:

Standard deduction: This is a fixed amount that reduces your taxable income. Each filing status has a different standard deduction amount⁶.
Tax brackets: Your filing status determines which tax bracket your income falls into, influencing the tax rate applied to your earnings⁷.
Eligibility for certain credits and deductions: Some credits and deductions have specific eligibility requirements based on filing status⁶.

It's important to remember that seemingly small changes in factors like dependents or filing status can significantly impact your tax refund⁸. Choosing the wrong filing status can lead to missed opportunities for deductions and credits, resulting in a smaller refund or even owing more taxes¹. Christian stewardship emphasizes honesty and making choices that align with biblical principles, which includes accurately reporting income and claiming eligible deductions⁹.

Different Filing Statuses and Eligibility Requirements

The IRS recognizes five main filing statuses:

Single: This status generally applies to unmarried individuals⁷.
Married Filing Jointly: This status is for married couples who choose to file a single return together, combining their income and deductions¹⁰.
Married Filing Separately: This status is for married couples who choose to file separate returns, each reporting their own income and deductions¹⁰. Filing separately can be beneficial in certain situations, such as when one spouse has a large amount of deductible medical expenses¹¹.
Head of Household: This status applies to unmarried individuals who provide a home for a qualifying child or dependent¹². Filing as Head of Household can significantly boost your refund by providing a larger standard deduction compared to single filers¹³.
Qualifying Widow(er): This status applies to individuals whose spouse has died within the past two years and who have a dependent child⁷.

Your filing status is determined by factors like marital status, the number of children you can claim as dependents, and your occupation⁷.

Here's a table showing the standard deduction amounts for each filing status in 2024 and 2025: ¹⁴

Filing Status	2024 Standard Deduction	2025 Standard Deduction
Single	$14,600	$15,000
Married filing separately	$14,600	$15,000
Head of household	$21,900	$22,500
Married filing jointly or qualifying widow(er)	$29,200	$30,000

Real-Life Impact of Filing Status

Let's look at a real-life example to illustrate how filing status can affect your tax refund. Imagine a single mother who was initially filing as "Single." However, she realized she met the requirements for "Head of Household" because she provided the main home for her child. By changing her filing status, she qualified for a larger standard deduction and potentially lower tax rates, resulting in a significantly larger tax refund. This extra money could then be used to support her family or invest in her child's future.

Key Takeaways

As we navigate the complexities of tax season, let's remember the importance of being responsible stewards of our finances. Choosing the correct filing status is crucial to ensure we're not overpaying our taxes or missing out on potential refunds. Here are some key takeaways from today's episode:

Review your filing status annually: Life changes, such as marriage, divorce, or having a child, can affect your filing status.
Understand the eligibility requirements: Carefully review the requirements for each filing status to determine which one applies to your situation.
Keep accurate records: Maintain organized financial records to support any deductions or credits you claim.
Seek professional advice: If you have questions or need personalized guidance, don't hesitate to reach out to a trusted Christian financial advisor.

By applying these principles, we can approach tax season with confidence and integrity, knowing that we are managing our finances in a way that honors God and reflects His wisdom.

Works cited

What to Know About Your Tax Filing Status & What It Means For Your Refund - YouTube, accessed January 15, 2025, https://www.youtube.com/watch?v=olwoZwLbchA
Common tax return mistakes that can cost taxpayers | Internal Revenue Service, accessed January 15, 2025, https://www.irs.gov/newsroom/common-tax-return-mistakes-that-can-cost-taxpayers
Six Tax Mistakes and Penalties to Avoid - Equifax, accessed January 15, 2025, https://www.equifax.com/personal/education/personal-finance/articles/-/learn/avoid-tax-mistakes/
2024 tax refunds could be larger than last year due to new IRS brackets. Here's what to expect. - CBS News, accessed January 15, 2025, https://www.cbsnews.com/news/tax-refund-2024-what-to-expect-when-will-i-get/
COMMON TAX MISTAKES TO AVOID, accessed January 15, 2025, https://home.army.mil/eisenhower/9316/6626/5123/COMMON_TAX_MISTAKES_TO_AVOID_2022_Oct20.pdf
How Does Filing Status Affect My Tax Refund? - Jackson Hewitt, accessed January 15, 2025, https://www.jacksonhewitt.com/tax-help/tax-tips-topics/filing-your-taxes/irs-filing-status/
Filing Status: What It Means on Your Taxes, Types - Investopedia, accessed January 15, 2025, https://www.investopedia.com/terms/f/filingstatus.asp
“Why do all my friends get bigger tax refunds than I do?” - erb financial, accessed January 15, 2025, https://erbfinancial.com/why-do-all-my-friends-get-bigger-tax-refunds-than-i-do/
Stewardship in The Bible: Teachings, Examples and Principles - Ministry Brands, accessed January 15, 2025, https://www.ministrybrands.com/church-management/stewardship-in-the-bible
Understanding Taxes - Module 5: Filing Status - IRS, accessed January 15, 2025, https://apps.irs.gov/app/understandingTaxes/teacher/hows_mod05.jsp
5 Hidden Ways to Boost Your Tax Refund - TurboTax Tax Tips & Videos - Intuit, accessed January 15, 2025, https://turbotax.intuit.com/tax-tips/tax-refund/5-hidden-ways-to-boost-your-tax-refund/L0AZGnJuS
Filing status | Internal Revenue Service, accessed January 15, 2025, https://www.irs.gov/faqs/filing-requirements-status-dependents/filing-status
4 Ways to Get a Bigger Tax Refund This Year - SmartAsset, accessed January 15, 2025, https://smartasset.com/taxes/how-to-get-bigger-tax-refund
How to Maximize Your Tax Return - Investopedia, accessed January 15, 2025, https://www.investopedia.com/how-to-maximize-your-tax-return-8422348

Ralph V. Estep, Jr.

Christian Financial Consulting

Ralph V. Estep, Jr. is a highly accomplished professional with a diverse background in finance, accounting, technology, and entrepreneurship. As the principal at Saggio Management Group, Inc., he has demonstrated exceptional leadership and expertise in various roles throughout his career.

Ralph's educational journey began at St. Mark's High School in Newark, Delaware before attending the University of Nebraska where he was an esteemed member of the Cornhusker Marching Band and had the privilege of performing at the Florida Citrus Bowl in Orlando.

Continuing his pursuit of knowledge and excellence, Ralph earned a Bachelor of Science Degree in Accounting from the University of Delaware. He further expanded his academic achievements by obtaining a Master's in Business Administration from Wilmington University.

Throughout his professional journey, Ralph has been recognized for his outstanding accomplishments and commitment to excellence. He is a member of prestigious organizations such as the Golden Key National Honor Society and Beta Gamma Sigma International Business Honor Society.

With an extensive range of professional designations including Licensed Public Accountant (LPA), Accredited Business Accountant (ABA), Accredited Tax Advisor (ATA), Accredited Tax Preparer (ATP), and Internal Revenue Service Registered Tax Preparer (RTRP), Ralph possesses comprehensive expertise in tax preparation and financial management.

Beyond his impressive qualifications, Ralph has actively engaged with various community programs as bo… Read More

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