Tax Refund Strategies for Families & the Self-Employed: What to Check Now

New Haven, Connecticut : August 16, 2026 : Jose’s Tax Service

If you received a tax refund earlier this year, do not wait until the next filing season to review your strategy. The most effective tax planning happens throughout the year.

Families should review credits, dependents, withholding, and major expenses. Self-employed individuals should review business income, deductions, estimated payments, and recordkeeping. These steps can help reduce tax liability, support a larger legitimate refund, or prevent an unexpected balance due.

A refund is not created by claiming unsupported expenses. Every credit and deduction must be accurate and properly documented.

First, Identify Which Tax Year You Are Planning For!

On August 16, 2026, most taxpayers are working in two different timelines:

1. The 2025 federal return:
   Taxpayers who requested an extension generally must file by October 15, 2026. If you did not file and did not request an extension, file as soon as possible. Additional penalties and interest may apply to unpaid tax.

2. The 2026 tax year:
   Income earned during 2026 will generally be reported on a return filed in 2027. Planning actions taken now may affect that future return.

Review both timelines. Do not assume that a prior-year refund means your current withholding or estimated payments are correct.

1. Check Every Family Tax Credit!

Tax credits reduce tax dollar-for-dollar. Some credits are refundable, meaning they may produce a refund even when the taxpayer has little or no federal income tax liability.

Review the following credits before filing:

• Child Tax Credit (CTC): Check each qualifying child’s age, relationship, residency, and Social Security number. The IRS reports the maximum 2025 CTC as up to $2,200 per qualifying child, subject to eligibility rules.
• Additional Child Tax Credit (ACTC): Review whether part of the CTC may be refundable. For 2025, the IRS reports that up to $1,700 per qualifying child may be refundable.
• Earned Income Tax Credit (EITC): Workers and families with low-to-moderate income may qualify. Self-employment income can count as earned income, but eligibility depends on income, filing status, investment income, and qualifying-child rules.
• Child and Dependent Care Credit: Review daycare, after-school care, summer care, and other qualifying expenses paid so you or your spouse could work or look for work.
• American Opportunity Tax Credit (AOTC): Eligible students in their first four years of higher education may qualify for a credit of up to $2,500, with a refundable portion potentially available.
• Premium Tax Credit (PTC): If you purchased health insurance through the Marketplace, locate Form 1095-A and reconcile the credit accurately.
• Saver’s Credit: Eligible taxpayers who contribute to an IRA or employer-sponsored retirement plan may qualify.

Use the IRS Tax Credits for Individuals page and the Interactive Tax Assistant to review eligibility. For EITC questions, check the official Earned Income Tax Credit guidance.

Do not claim a dependent based only on financial support. Residency, relationship, age, and support tests may apply. Unsupported claims can delay processing and may lead to repayment, penalties, or an IRS examination.

2. Review Your Filing Status and Household Information!

Your filing status affects tax rates, deductions, and eligibility for several credits. Review your status after any major life event, including:

• Marriage or divorce.
• Birth, adoption, or death in the household.
• A child moving into or out of your home.
• A change in custody arrangements.
• A spouse beginning or ending employment.
• A move to or from Connecticut.
• A change in Marketplace health insurance coverage.

Gather Social Security numbers or Individual Taxpayer Identification Numbers (ITINs) for everyone included on the return. Keep school, medical, lease, or official correspondence records that may support a dependent’s household residency if documentation is later requested.

If you are uncertain whether to file as Single, Married Filing Jointly, Married Filing Separately, or Head of Household, review the rules before submitting Form 1040. Filing under the wrong status can reduce available benefits or create an incorrect return.

3. Compare Deductions Before You File!

Most taxpayers choose between the standard deduction and itemized deductions. Do not select an option based on the prior year alone.

Create a list of possible itemized deductions, including:

• Mortgage interest.
• State and local taxes (SALT), subject to applicable limits.
• Qualified charitable contributions.
• Certain medical and dental expenses above the applicable threshold.
• Other expenses allowed under current federal law.

Then compare the total with the standard deduction for your filing status. Keep receipts, bank statements, acknowledgment letters, and year-end statements for every itemized deduction claimed.

Also review deductions that may be available even when you use the standard deduction. These may include:

• Student loan interest.
• Deductible traditional IRA contributions.
• Eligible health savings account (HSA) contributions.
• The deductible portion of self-employment tax.
• Eligible self-employed health insurance costs.

Tax treatment depends on income, insurance coverage, employer plan participation, and other factors. Confirm the applicable rules before making a contribution solely for tax purposes.

4. Capture Legitimate Self-Employment Deductions!

Self-employed individuals, freelancers, contractors, and gig workers generally report business activity on Schedule C (Form 1040), Profit or Loss From Business.

Review expenses that are ordinary and necessary for the business. Potential categories may include:

• Advertising and marketing.
• Business software and subscriptions.
• Office supplies.
• Professional services.
• Business insurance.
• Certain equipment.
• Business phone and internet use.
• Payment processing fees.
• Vehicle expenses for qualifying business use.

Separate personal and business transactions. Use a dedicated business bank account or bookkeeping system when possible. Mixing expenses makes it more difficult to identify deductible costs and may weaken documentation if the return is reviewed.

Home Office Expenses

A home office deduction generally requires space used exclusively and regularly for business. A dining table used occasionally for business may not meet the requirement.

Measure the qualifying area. Retain rent, mortgage interest, utilities, insurance, and property tax records. If you use the simplified method, follow the applicable square-footage limit and calculation rules.

Business Mileage

Keep a mileage log throughout the year. Record:

1. Date of the trip.
2. Starting and ending odometer readings.
3. Business purpose.
4. Destination.
5. Total business miles.

Commuting from home to a regular workplace is generally treated differently from qualifying business travel. Do not estimate mileage at year-end when a contemporaneous log can be maintained.

5. Reconcile Income and Estimated Tax Payments!

Self-employed taxpayers generally do not have an employer withholding federal and state income taxes from each payment. They may also owe self-employment tax.

Review:

• Form 1099-NEC for nonemployee compensation.
• Form 1099-MISC for applicable income.
• Form 1099-K for payment-card and third-party network transactions.
• Invoices and client payment records.
• Bank deposits.
• Payment-app statements.
• Quarterly estimated tax confirmations.

Use Form 1040-ES, Estimated Tax for Individuals, when calculating and paying federal estimated taxes. The third estimated tax payment for the 2026 tax year is generally due September 15, 2026. The fourth payment is generally due January 15, 2027.

Do not rely only on a 1099 form. Taxable business income may still need to be reported when no information return was issued.

6. Recheck Your Form W-4 Now!

Employees should review Form W-4, Employee’s Withholding Certificate, after changes in income, marital status, dependents, or other household circumstances.

Use the IRS Tax Withholding Estimator to compare current withholding with expected annual tax. Consider an adjustment when:

• You received a large refund repeatedly.
• You owed a significant balance.
• Your spouse started or ended a job.
• You added a dependent.
• You started a side business.
• You received substantial investment income.
• You changed your retirement contributions.

A large refund may feel helpful, but it can also mean too much money was withheld from each paycheck. A smaller refund with more accurate withholding may improve monthly cash flow. The objective is correct tax payment, not an artificially inflated refund.

7. Organize Your Records Before Filing Season!

The IRS states that records should support income, deductions, credits, and other items reported on a return. Create separate folders for personal and business records.

Families Should Gather:

• Forms W-2 and 1099.
• Form 1095-A, if Marketplace insurance was used.
• Form 1098-T for eligible education expenses.
• Childcare invoices and provider information.
• Mortgage interest statements.
• Charitable contribution receipts.
• Retirement and HSA contribution records.
• Dependent identification and residency documents.

Self-Employed Individuals Should Gather:

• Forms 1099-NEC, 1099-MISC, and 1099-K.
• Sales records and invoices.
• Business bank statements.
• Expense receipts.
• Mileage logs.
• Home office measurements and supporting expenses.
• Health insurance invoices.
• Estimated tax payment confirmations.
• Bookkeeping reports.

Review the IRS Recordkeeping guidance for additional requirements. Incomplete records may prevent a deduction from being claimed or may delay resolution of an IRS notice.

8. Correct Missed Credits or Deductions Promptly!

If you discover that a completed return omitted a legitimate credit or deduction, review whether Form 1040-X, Amended U.S. Individual Income Tax Return, should be filed.

Start by comparing the original return with the corrected information. Retain documentation for the change. An amended return may be appropriate in some circumstances, but it should not be filed merely to pursue an unsupported refund.

The IRS provides filing information through its Filing resource, including amended returns, filing deadlines, extensions, and estimated tax information.

Your Next Steps in New Haven!

Complete this checklist now:

1. Review your 2025 return for missed credits and deductions.
2. Confirm whether an extended return must be filed by October 15, 2026.
3. Update Form W-4 if your withholding is inaccurate.
4. Calculate your September 15 estimated payment if you are self-employed.
5. Separate business and personal records.
6. Confirm dependent information and Social Security numbers.
7. Save Form 1095-A, Form 1098-T, receipts, mileage logs, and payment records.
8. Schedule a tax planning review before year-end.

Jose’s Tax Service provides individualized tax preparation, federal and Connecticut e-filing, tax planning, bookkeeping, and business support for families and small business owners in New Haven and beyond. Review the Tax Preparation Service in New Haven and year-end tax planning resources, or schedule a tax appointment.

Use the remaining months of 2026 to organize records, correct withholding, and plan before the next filing deadline. Accurate preparation starts before tax forms arrive.

Category: Tax Planning | Tags: tax refund, personal finance, IRS tips, New Haven taxes