For those with relatively straightforward income situations, filing taxes might seem manageable. However, the process can quickly become intricate due to various factors. Your employer furnishes you with a W-2 or 1099 form, delineating your earnings and taxes paid. Armed with this information, you proceed to fill out Form 1040, available on the IRS website.

Abby Donnellan, a certified public accountant and senior tax strategist at Moneta, advises following the instructions meticulously, leveraging resources on the IRS website to ascertain your taxable income accurately.

The complexity intensifies when considering different sources of income and tax rates. Ordinary income is taxed at marginal rates, whereas income from investments or side ventures is subject to different taxation schemes. Identifying eligible tax credits and deductions further complicates matters.

Donnellan told CNBC Make It that using tax software or consulting professionals are great options.

“I am a tax accountant and I spent five years of additional education after high school and an additional eight years in public accounting to understand taxes, and it still would be difficult for me to do my own taxes by hand,” said Donnellan.

Gregory King, a certified public accountant and tax specialist, advises taxpayers to explore overlooked tax credits, such as those for electric vehicles or home energy efficiency upgrades, to optimize refunds. Common credits include the Child Tax Credit for parents and guardians of qualifying dependents. There’s also the Earned Income Tax Credit for low to moderate-income earners.

The size of a tax refund can be influenced by how you file. To maximize your tax refund this year, make sure you are getting all of your eligible tax credits, contributions to retirement accounts, and deductible expenses.

During tax season, every taxpayer has the option to claim the standard deduction, which reduces taxable income by a fixed amount. Alternatively, taxpayers can itemize deductions if the total exceeds the standard deduction available to them. Charitable donations, gambling losses, and mortgage interest payments are examples of expenses eligible for itemized deductions, according to the Internal Revenue Service website.

“Everyone typically thinks of itemizing their deductions to increase the return, but many people forget to check tax credits, which can make a big difference,” Gregory King, a certified public accountant and tax specialist with financial advisory firm Empower, told ABC News.

Despite efforts to simplify tax filing and maximize refunds, disparities persist. Black taxpayers face higher audit rates, a phenomenon attributed to systemic biases within the IRS’s audit algorithms.

“While there is a need for further research, our initial findings support the conclusion that Black taxpayers may be audited at higher rates than would be expected given their share of the population,” IRS Commissioner Daniel Werfel told lawmakers, NPR reported.

“We are dedicating significant resources to quickly evaluating the extent to which IRS’s exam priorities and automated processes, and the data available to the IRS for use in exam selection, contribute to this disparity,” Werfel said in a May 2023 letter to the Senate Finance Committee.

“The racial discrimination that has plagued American society for centuries routinely shows up in algorithms that governments and private organizations put in place, even when those algorithms are intended to be race-neutral,” said Wyden, calling the racial bias “completely unacceptable.”

There are ways to try and avoid an audit. Also double check your figures. One of the primary flags for auditors is incorrect data entry.

Be honest. Maintaining complete truthfulness on your tax return is imperative to minimize the likelihood of an audit. Providing realistic and precise details regarding income, deductions, credits, and other financial figures can serve as a deterrent against audits, according to TurboTax.

Photo by Nataliya Vaitkevich: https://www.pexels.com/photo/tax-documents-on-black-table-6863259/