Best Investments for Boosting Your Tax Refund

If you go by history or statistics a large number of taxpayers will receive tax refunds. Take the year 2015 for an example, where about 80% of taxpayers received refunds of $3000 or more. Consider that the 80% is out of a total of 150 million individuals. You would certainly want to be in that 80% and even push for higher refunds. We will take a look at some of the best investment tools. These would not only boost your portfolio but also help you bag bigger tax refunds.

Where to invest?

Retirement planning comes to your rescue when it getting better tax refunds is your concern. Simply because they have the capabilities of boosting up your refunds. We all are aware of IRA or Individual Retirement Account, but what most of us are not aware of, is that it provides double benefits when it comes to taxation.

Not only does IRA allow deductions till a certain limit, but also can help you get refunds if your income is within an acceptable limit.

Using a traditional IRA you can avail deductions up to $5500 and up to $6500 if your age is 50 and above.

You can opt for the Retirement Savings Contribution Credit, under which you stand to get tax credits of up to $1000 if filing as an individual or $2000 if married filing jointly. You just need to figure out if you qualify for the credits or not. If you do, do not hesitate to open a traditional IRA and claim tax credits.

A lot of individuals invest their money is Roth IRAs. Things pan out a bit differently in this case, as you cannot deduct your investments using Roth IRA. However, investments in Roth IRA are eligible for Retirement Savings Contribution Credit.

Other investments for tax credits

Investing in Roth IRA or traditional IRA gives you the opportunity to increase your tax refunds provided your income is within certain limits, we will discuss those limits later on. But there are other forms of investments as well, with which you can benefit from the Retirement Savings Contribution Credit.


We generally know 401(k) as the retirement plan that an employer sponsors. Apart from the employer’s contribution, you also contribute for the same before taxes. With 401(k) you have the control over the investments. You can choose from mutual funds, bonds, stocks and some other market instruments. The most popular ones being target date funds, which eventually become low risk as you near your retirement. Money that you invest in 401(k) is also eligible for Retirement Savings Contribution Credit.


The 403(b) is a retirement plan which is applicable for a limited audience, namely educational institutions and certain non-profit organizations. The plan is tax deferred in nature, meaning they are nontaxable till they grow (usually till retirement). Once you withdraw them post retirement, normal taxation is applicable to them. Investment in 403(b) also qualifies for the Saver’s tax credit.


Companies that have an employee base of 25 or fewer, can avail the SARSEP or Salary Reduction Simplified Employee Pension Plan. With the plan, employees can invest pre-taxed money to their IRA as part of their salary deductions. SARSEP also qualifies for Saver’s tax credit.

One of the best ways for boosting your tax refunds is to look out for eligibility of different tax credits.

There is, however, a small caveat to that piece, you need to be in the low to medium income range to benefit from most of the tax credits if not all. The upper cap for income levels for various categories are:

  • $30750 for single filers
  • $46125 for head of households
  • $61500 for married filing jointly

If you are within these income limits, the above mentioned investments can boost up your tax refunds substantially.

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