Beyond the Big Refund: Expert Advice From Tax Attorney Lance Drury on Maximizing Your Tax Strategy

As tax season is upon us, the anticipation of a substantial tax refund often occupies the minds of many. Yet, Lance Drury, a Tax Attorney and the owner of The Law Office of Lance R. Drury, with practices in Ste. Genevieve and St. Louis, Missouri, as well as San Antonio, Texas, and Nashville, Tennessee, offers advice that completely reverses this common aspiration.

In our interview, he provocatively suggested that aiming for a larger tax refund may not be in one’s best financial interest, essentially critiquing the common practice of overpaying the government only to receive an interest-free refund.

Drury’s insights challenge us to rethink our tax strategies. Rather than viewing a large refund as a windfall, he proposes a more calculated approach to managing withholdings and leveraging tax credits and deductions. Our interview serves as a gateway into a deeper exploration of tax planning strategies, the intricacies of deductions and credits, and the impact of recent tax law changes on refunds.

For those of us navigating the complexities of tax returns, understanding these facets could be the key to not only optimizing our refunds, but enhancing our overall financial health.

Read on to discover the expert strategies from Drury that could potentially shift your perspective on what it means to receive a ‘good’ tax refund and how to strategically position yourself for financial advantage in the tax season and beyond.

What tips do you have for someone hoping to get a bigger tax refund?

“I would not suggest getting a bigger refund,” Drury shared. “Refunds are actually bad, as you know, meaning you’ve overpaid the government money in withholding during the course of the calendar year — and you aren’t getting paid any interest for it.”

He went on to explain that you are better off determining what you overpaid (through withholdings or ETPs) last year, and if you expect roughly the same income this year, to withhold or pay less. Instead, Drury recommends putting that money somewhere else where you are actually gaining from it, like a high yield savings account, instead of sending it to Uncle Sam.

“Nevertheless, self-employed individuals may find it difficult to forecast their income for the year if they don’t watch it carefully, and may want to overpay to be on the safe side,” he conceded. “Therefore, if you want a bigger tax refund, there are steps.”

He outlined them as follows:

  1. Withhold more.
  2. Take advantage of credits available, which may depend on income levels, but include the Child Tax Credit, home energy credits, EITC, and education credits.
  3. Deduct as much as possible, whether through a business if self-employed, or if itemized deductions make sense too on an individual level. Itemize as much as possible.

When we asked Drury what the key factors are that influence the size of a tax refund, Drury said, “Those three things. Withholdings and ETPs; deductions; and credits.”

Can you explain the impact of deductions and credits on the refund amount?

He then explained that there are three levels: Deductions as a business owner if self-employed, deductions on the individual level, and credits.

“Deductions as a business owner if self-employed are arguably the most liberal of deductions,” he said. “You can deduct anything that is an ‘ordinary and necessary’ business expense. This is subject to a bunch of qualifiers, but is quite inclusive, generally speaking. With the right research taken in the right year, I was able to get a client to deduct 100% of the cost of her new vehicle.”

When it comes to deductions on the individual level, these are either the standard deduction that most people take or itemized deductions. Drury further explained that itemized deductions are especially used with home owners in the earlier years of ownership through the interest deduction, medical costs in some cases, or charitable contributions.

The third level he told us about is credits, saying, “These are more limited and are often determined by income level, but some include the EITC, the Child Tax Credit — now likely increased as of late with the passage of the House’s new tax bill — the Premium Tax Credit — Obamacare, for example — and home and vehicle energy improvement credits.”

Along with withholding, Drury said, these variables change the final tax owed on someone’s return. If someone paid more in during the course of the year than what is owed through these offsets, that will increase an individual’s refund accordingly.

Are there any changes in tax laws that could impact someone’s refund amount?

“In fact, there are,” he said. “There are a couple known tax law changes that are probably coming. First, the House, on January 1st of this year, passed the ‘Tax Relief for American Families and Workers Act of 2024.’ A bill getting past the House with bi-partisan support increases the chances that it will be passed, and this is relevant here because one thing this bill does is expand the Child Tax Credit by a maximum of $ 1,900 per child in 2024. This could increase a person’s refund and save them taxes.”

However, Drury went on to explain that the bill “also unfortunately ends the ERC program.”

Further, the TCJA from 2019 will sunset several provisions after December 31st of 2025. If this happens by Congress not passing legislation that extends the TCJA provisions, the standard deductions will be lowered, meaning people may be able to deduct less, and that would change someone’s refund amount.

What are the tax planning strategies that people can implement throughout the year to enhance their refund?

Individuals are best served, according to Drury, by pre-tax retirement contributions that defer income tax, 529 plans, and Health Savings Accounts (HSAs). These are all deductions that someone can take, regardless of whether they get standard deductions or itemized deductions.

“Most people are aware of the benefits of pre-tax retirement accounts,” he said. “529 plans can do the same for a beneficiary’s education, and the beneficiary doesn’t even need to necessarily be a dependent. You can set it up for a grandchild and write off the taxes. HSAs do the same for healthcare expenses and are my favorite type of tax-saving vehicle. You deposit money, pull it out of the account for qualified health expenses, which are fairly broad, and you can automatically write off the taxes.”

In addition, Drury elaborated, you can invest the money tax-free in the HSA, and unused amounts can be distributed to beneficiaries after death tax free and would not need to be used on healthcare costs.

How does the choice of filing status affect the tax refund?

There are four general filing statuses that affect rates: Filing as S (Single), MFS (Married Filing Separately), MFJ (Married Filing Jointly), and HOH (Head of Household.)

According to our lawyer expert, “Filing S and MFS are roughly the same tax rates. However, filing as MFJ allows a married couple, in most cases, to combine their income and expenses on one return, and — in most cases but not all — get a preferential lower tax rate. MFJ is the IRS’ way of encouraging people to marry. Obviously, if you have a lower tax rate, that would increase your chance of getting a refund, because you have less of each dollar being taxed, leaving a better likelihood of withholding more than you need during the course of the calendar year.”

As we navigate the complexities of tax preparation and strategize for potentially larger refunds, Drury’s insights offer a blend of caution and wisdom. The desire for a significant refund, while appealing, overlooks the reality that such refunds represent an interest-free loan to the government — a reminder that more nuanced financial planning can yield better outcomes. By adjusting withholdings, maximizing deductions and credits, and staying informed on legislative changes, you can optimize your tax situation.

Moreover, Drury’s emphasis on strategic investments, such as retirement contributions, 529 plans, and Health Savings Accounts, underscores the importance of proactive financial stewardship. The choice of filing status, too, plays a critical role in shaping one’s tax obligations and potential refunds.

While the allure of a large tax refund is understandable, Drury encourages us to look beyond immediate gratification towards more strategic financial planning. By leveraging the tools and strategies we discussed, we can not only enhance our refund potential, but also improve our overall financial health. This approach aligns with the broader goal of financial savvy: Not just to increase what we receive at tax time, but to ensure our money works effectively for us throughout the year. Thank you, Lance R. Drury!

About The Law Office of Lance R. Drury

The Law Office of Lance R. Drury, founded in 2006, has been a leading legal practice in Ste. Genevieve, Missouri, St. Louis, Missouri, San Antonio, Texas, and Nashville, Tennessee specializing in tax law matters. With over 35 years of experience, Lance is a nationally-recognized tax resolution attorney providing innovative solutions to IRS tax dilemmas with a team that is dedicated to providing clients personalized and effective solutions for tax planning, dispute litigation, and tax resolutions. For more information, please visit