Tax Time Tips: Understanding Refunds and Planning Ahead

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Filing taxes is an annual task that may not be top of mind as a financial boost, but it can lead to one if you’re owed a refund. Whether you're expecting money back or not, understanding how tax refunds work and how to plan around getting one (or not) can make a real difference.
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How Do You Know If You're Owed a Refund?‍

If you’ve gotten a refund in the past and your situation hasn’t changed, there’s a good chance you’ll get one again. But if your income went up or down, or if something else changed—like how many dependents you’re claiming—your refund could change too.

Your refund is based on several factors, including:

How much tax was withheld from your paycheck throughout the year
(This depends on how you filled out your W-4. If you’re self-employed, it depends on how much you paid in quarterly taxes.)
Your filing status (e.g. single, head of household, married filing jointly)
Whether you have dependents
Which tax credits and deductions you qualify for

Here’s an example: If you have a dependent but fill out your W-4 as a single filer, more taxes will be withheld from each paycheck. So when you file, you’re more likely to get a refund because you were taxed at a higher rate throughout the year. On the flip side, if you mark yourself as head of household but don’t actually qualify, not enough may be withheld—so you could end up owing.

Tax credits (like the Earned Income Tax Credit or Child Tax Credit) and deductions (like student loan interest or retirement contributions) can also reduce what you owe or increase your refund. Refundable tax credits can put money back in your pocket if they are greater than what you owe in taxes.

Something to keep in mind: Filers who earn lower incomes might hear from others that they shouldn’t bother filing because they didn’t earn enough or taxes weren’t withheld. But if you’re eligible for refundable credits like the California Earned Income Tax Credit (CalEITC), you may still get a refund even if you didn’t earn much. So whether or not you’ll get a refund isn’t based on just one thing. Getting informed about who you can claim, what tax credits you’re eligible for, and how you filled out your W-4 can all help you better understand where you stand.

One way to get a better sense of what to expect is to use free tax filing software (like what is available at our MyFreeTaxes.org website) to fill out a mock return. You don’t need to submit anything if you’re not ready or don’t feel comfortable. You can use the software to input your income, information about your dependents, etc. and see what your refund might look like. It may feel like extra work, especially if you plan to file another way, but it can help you understand what to expect and plan accordingly.

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Financial Planning with a Refund in Mind‍

If you’re owed a refund, whether it’s big or small, it can make a difference. For some filers, a refund might be the largest lump sum they see all year. For others, it might be a smaller amount—maybe just enough to cover a utility bill, fill up your gas tank, or enjoy a meal out. Either way, it’s your money, and it’s worth taking a moment to think through how it can support your priorities.

There’s no one right way to use a refund. It’s about what makes the most sense for you. The important thing is to take a moment to pause and think through your priorities before the money hits your account.

Here are some questions to ask yourself as you make a plan:

What could this help with right now? Even a smaller refund can go toward something that eases your day-to-day stress and boosts your mood-—like food or a partial bill payment.

Can any of this go toward the future? $10, $20, or $50 might not seem like a lot, but even small amounts can be the start towards a savings or retirement account that can grow as it accumulates interest.

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What If You’re Not Getting a Refund?

It can feel frustrating to hear other people talking about their refund plans when you're not expecting one, or when you’re not sure why you didn’t get one. If you were hoping for a refund, and it didn’t happen, that disappointment is real. And if you’re seeing friends or family receive hundreds or even thousands of dollars back, it’s easy to wonder, Why not me?

There are a lot of reasons someone might not get a refund. Changes in your income, how much was withheld, or which credits you qualified for can all play a role. Getting clear on those things now can help you plan differently for next year.

Even if a refund isn’t in the picture this year, filing your taxes free of cost can still help you save money you might otherwise spend on a paid preparer or for-cost self-filing software. Whether you file online or get help in person, MyFreeTaxes.org can connect you to filing options that won’t cost you anything.
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Taking the First Step

To access a refund or claim credits, you need to file taxes. Through our affiliated site, MyFreeTaxes.org, you can:

File for free by either getting connected to IRS-certified volunteer tax preparers (in person or online) who can prepare your taxes for you or by filing on your own using trusted, IRS-approved tax software
Access tools and guides that help you learn more about the filing process, tax credits, and how to file for free

By using free filing resources, you can keep more of your refund (or save money if you’re not getting a refund) instead of spending it on a paid tax preparer or paid software.

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Stay Organized with MyMoneyPath

Whether you’re planning how to use your refund or figuring out next steps if you’re not getting one, budgeting can help you feel more in control of your money.

With a free MyMoneyPath account, you can:

Create and track SMART goals—like saving a portion of your refund, reducing debt, or building an emergency fund
Use tools that help you start or revisit a budget, so you can plan based on what you have now and what’s coming up
Get reminders and tips to keep moving forward at your own pace

Disclaimer: The information provided in this newsletter is for informational purposes only and should not be considered financial advice. Please consult a financial advisor for personalized advice tailored to your individual circumstances.