IRS Tax Refund

IRS Tax Refund

by | Nov 28, 2017 | Tax Refund

IRS Tax Refund

IRS Tax Refund,According to the information available to the IRS, every year a substantial number (about 75-80%) of the taxpayers are eligible for tax refunds in some form or the other. Of course, there are different clauses and conditions when it comes to tax refunds, but the general idea remains the same.

If you have paid more taxes than what you are liable for, the government issues a refund for the same, as long as you meet all the conditions.

You have filed your tax returns and realize that the government owes you a certain amount of money. That can be both exciting as well as confusing. It is exciting because you are eligible for a refund and confusing because you have no idea when you can realize those refunds.

Tracking IRS Tax Refunds

The IRS has several useful tools available for its taxpayers, but the Refund tracking tool is something that all the taxpayers rejoice.

If you visit the IRS website, you get an option of “Where’s My Refund”.

This is the most accurate medium for checking your tax refunds, as the IRS updates the entities every 24 hours. You need not be a techno wiz craft to use the tool as well. All that you need is your Social Security Number or Employee Identification Number, whichever was used for filing of taxes. Up next, you would need the filing status, such as single, married jointly filing or married filing separately etc. And lastly the exact amount of tax refunds.

Individuals who have filed their taxes electronically can track their refunds after 24 hours of their tax filing. On the other hand, if you have done it the old school way you will have to wait for a minimum of four weeks. The usual turnaround time for processing of refunds is about three weeks, but it at times it might take a bit longer owing to the fact that the IRS is underpowered when it comes to resources.

Don’t forget to check out Best Investments for Boosting Your Tax Refund

Missing Refunds

While opting for tax refunds, the safest and easiest option is to provide your details and the amount gets credited directly into your bank account. As you do not have to worry about the check and its traversal, it is the safest option as well. And the quickest as well, since you do not have to visit the bank or ATM to encash the same.

Quite a few individuals or taxpayers to be specific opt for getting the refunds in the form of checks. In fact, the IRS does not allow more than three deposits per year for a specific bank account, so you might have to resort to checks in such cases. Though is it not a usual occurrence, there are chances of the same getting lost from time to time. You should immediately reach out to the IRS in such a scenario to trace your missing check. There are two possible outcomes when it comes to a missing check, either it was cashed or it wasn’t. The IRS will investigate and find out if the check has been cashed or not. If no, they will send out a replacement check for you. If yes, the IRS then starts working towards a claims package. Once all the formalities are over, they will issue a replacement check.

If you have opted for filing your tax returns electronically, you can expect the refunds within 21 days of the filing.

But when it comes to refunds for paper returns, the IRS takes about 6-8 weeks and the duration reaches 8-12 weeks if there are amendments to the returns. Make sure you wait for the mentioned timelines before reaching out to IRS regarding the same.

Looking to get bigger IRS tax refunds, click here to know how.

Taxable Refunds – It’s Details, Understandings and Taxable or Non-taxable

Taxable Refunds – It’s Details, Understandings and Taxable or Non-taxable

by | Nov 24, 2017 | Tax Planning, Tax Refund

Taxable Refunds – It’s Details, Understandings and Taxable or Non-taxable

Taxable Refunds ,The tax system and all of its mechanisms can be confusing at times and difficult to comprehend for a normal person. But if you put in some effort in understanding the system, it doesn’t seem all that difficult anymore. Of course, there are several aspects of taxes, but we will focus mainly on refunds. When you have paid more taxes than you are liable for, you become eligible for tax refunds, provided you meet all the criterion. Statistics show that about 80% of individuals filing for taxes are eligible for tax refunds in some form or the other. However, the fact that state tax refunds can be taxable, puzzles a lot of the tax payers, who find it in bad taste as they must pay taxes on the refunds that they received.

Understanding State Refunds

Most of us do resent the idea of having to pay taxes on tax refunds, but there is more than what meets the eye. When it comes to taxes, the IRS and the States use the terms Refunds and Overcharge identically. And as you might have guessed by now, overcharge is taxable. Let us take an example where Josh has a $1000 over payment to the state and receives a refund for the same amount. The $1000 is taxable and we will get to the reasons in some time. But if he chooses to pay a piece of the same, let’s say $200 in some charity, the refund now becomes $800. He can use the $200 for tax rebates in the tax filing for the coming year.

The Underpinnings

Here is how it works. When you file your federal tax returns, one of the itemized deductions allowed is the State income tax that you have paid. But here is the thing, you cannot prepare for the state tax returns without going through the federal tax returns. Thus, there are chances that you are not aware of the State taxes that you must pay and IRS asks you to provide a tentative amount for the same. If you have overshot or undershot the amount, you need to address those in the next year tax returns. Before you draw any conclusions, the IRS does help you out in figuring the tentative amount of State income taxes. Keeping the above in mind, let us assume Josh had $2500 to be paid as part of State taxes. But when he filed for the state returns, he finds out that he only owed $1500. Thus the remaining $1000 will act as a tax refund for Josh. To overcome this situation, the IRS allows you to declare the $1000 overpayment as one of your income items.

Taxable or Non-taxable?

The state or local tax refunds are taxable in some cases whereas they are non-taxable in other cases. We will look into both the scenarios now. The most common scenario where you end up not paying any taxes on the refunds is if you do not deduct the same. If you have not itemized your tax refunds as part of the deductions, then the overpayment does not become a part of taxable income for that year. Some people manage to deduct their sales taxes, rather than state tax refunds when it comes to the previous year, thus giving them immunity against taxable refunds.

But if you have itemized the state and local taxes and were able to secure a refund for the previous year, the same amount or overpayment becomes a taxable entity for the current year. Keeping a close eye on the Form 1099-G can help you out in such situations. But even if you do not receive the same, overpayments are taxable.

Financial Planning Month

Financial Planning Month

by | Nov 21, 2017 | Tax Planning

Financial Planning Month

One simply cannot emphasize enough the importance of financial planning. A small amount of time spent on it helps you go the extra mile in the long run or achieve that dream a wee bit faster. Chances are high that you haven’t started any financial planning till now. But as they say, it’s never too late and what better time to get started with it than the Financial Planning Month. October is the National Financial Planning Month and it ensures that more and more people are aware of the fact that financial planning is crucial to their financial survival.

What is it?

If you want to go on a trip with your friends, there is a long list of things that you need to consider; starting from mode of transport to the list of people joining the trip, from accommodation to other activities that you want to carry out during spare time. Essentially, you are planning your trip. Now take this into perspective, for a 3 to 4-day trip you put in so much of effort but when it comes to money management, we kind of take it for granted. A good financial plan then includes all your financial goals when it comes to different time frames such as short term, midterm and long term. It also includes ways that can assist you in achieving those goals. You need to have a good blend of savings as well as investments; otherwise, it is going to be a bit difficult to meet those goals.

How to Approach?

Getting a hang of the ground realities is the first step of financial planning. It includes understanding and jotting down all of your current investments, insurance(s) and of course liabilities. And it will not hurt at all if you can get the minor details such as interest rate of a loan or its tenure. The next logical step would be analyzing and budgeting your monthly expenses. Budgeting is just the beginning, as it helps you discover how many of those so-called important expenses are really important. With its help, you can also plan for situations that are not part of the scheme of things.

For an instance, that unwanted trip to the hospital or the unfortunate breakdown of your vehicle, needs immediate action and it can set your finances back a little bit. Thus, being proactive on budgeting helps you overcome such situations. Once you are done with the above two activities, now it’s the turn of defining financial goals. On completion of the goals, it is imperative that you segregate them into short term, midterm and long-term categories. A clearly laid out plan also gives you the confidence of tackling each of them. Your plan must also include ways to overcome unwanted situations and manage risks, while also looking at ways in which you can reduce the burden of taxes.

Do you really need it?

All of the above can seem to be a bit overwhelming. But not getting into this kind of planning will do more damage to your portfolio than anything else. A lot of us get into financial crunch at some point due to lack of proper financial planning. If you feel it is a bit too much, you can always take help of experts or advisors when it comes to financial plans. On the other hand, if you are confident that you can manage on your own, make the most of the Financial Planning Month and take that first step. No matter how small it might be, take the initiative and keep adding all the different pieces together for healthy finance.

 

How to do e-filing Income Tax Return

How to do e-filing Income Tax Return

by | Nov 17, 2017 | Tax Refund

How to do e-filing Income Tax Return

Filing your income tax return using paper submissions is soon going to be a thing of past. There are doubts about the fact that e-filing of income tax returns are getting more and more popular as days pass by. And there are enough reasons for the same as well.

E-filing enables you to a much faster processing of the returns, faster refunds if you are eligible for any and also is more accurate.

The following are the steps how you can proceed with the e-filing of your income tax returns.

Information Gathering

Though you would be filing your returns electronically, it doesn’t give you the liberty to fill up anything on the forms. You need to spend some time and do the due diligence to get all right set of information before you can begin with your e-filing process. You need to gather information regarding all tax deductions and tax credits earned. If there are any other items that might help you reduce your tax obligation, you would need to keep a track of those as well. There are no hard and fast rules to have these set up, but they help for a much smoother tax filing process.

Choose a platform

There is more than a way of filing tax returns for a specific financial way. There are websites that offer the services for free, whereas there are certain websites that offer their tax preparing software at certain costs. You could alternatively use the free filing program by IRS to have your taxes done. The coalition between IRS and Free File Alliance LLC brings forward free e-filing of tax returns for individuals.

Filing up the tax forms

All the information that you manage to gather at the first step will come in handy. No matter which mode of e-filing you pick, you will have to fill up the tax forms. Filing tax returns using online websites makes things way easier, however, one has to be extremely careful regarding the same. The data or information provided as part of the application filing has to be as accurate as possible. Any discrepancies or differences will come back to haunt you at a later stage.

E-filing of tax returns

Gone are the days when you had to fill up application forms, get hold of envelopes in which the application forms fit in, and then get postage stamps and finally post them to the IRS. Electronic tax filing makes this entire process a whole lot easier and convenience is at its forefront. Tax filing season translates to a nightmare for a lot of individuals, not knowing what exactly to do or how to get started. All that you need is a computer that has access to the internet and you can proceed with the same. IRS allows you to e-file any one of the forms namely Form 1040, Form 1040A, Form 1040EZ, 1040NR or Form 1040-SS. If you are using any of the e-filings software for tax returns things are relatively easier. They ask you a bunch of questions up front and do all the calculations on your behalf.

The forms have provisions for expenses as well as deductions. The website consists of all the latest updates from the IRS website, thus you need not worry about the same. You just have to fill in the details pertaining to you and the website or the computer does all the calculations. The moment you are content with all the information, with the click of a button the tax returns will be on their way.

E-filing the taxes allow you to bring down the chances of human errors dramatically. E-filed tax returns usually receive refunds within 21 days, thus they are incredibly fast as well. The convenience and ease along with all these benefits are something that you cannot ignore for sure. IRS pays a great deal of attention to the security or confidentiality of the information provided on the websites. The convenience and ease along with all these benefits are something that you cannot ignore for sure.

 

IRS Process to File Tax Returns

IRS Process to File Tax Returns

by | Nov 10, 2017 | Tax Planning, Tax Refund

IRS Process to File Tax Returns

Getting through the tax returns process is a chore that most of us would not like to a part of. However, it is a necessity that needs to be covered at any costs. If you have somehow managed to face your demons and file your taxes and tax return, the next step is waiting for a tax refund if you qualify for any. But before we get to how long it is going to take for your refunds to be dispatched or credited, it is important to know the internal process as well.

Deadlines

The IRS is no stranger when it comes to deadlines. They have a very strict timeline that they have to follow and ensure that all the returns are filed for individuals as well as businesses. 15th of April is the final deadline before the returns have to be filed. Unless the same is on a holiday, in that case, the next working day acts as the deadline. In case of extensions, the modified timelines come into effect. The deadline for filing tax returns for individuals is the 15th of April. As far companies or organizations go, the deadline of March 15th mostly holds good. The last date for organizations and companies is the 15th day of the third month of a fiscal year. If you have opted for an extension of the tax return date, the deadline shifts to the 15th of October (6 months from the actual due date). The IRS starts processing the tax returns as soon as they receive them. No matter what the source is, electronic or paper submissions, the returns follow a first come first serve basis.

Post Tax Filing

As soon as you file or e-file your tax returns you can expect an acknowledgment from the IRS within 48 hours of the filing. If you have e-filed your taxes, you will receive an acknowledgment email within the prescribed time. Individuals who chose a different form to file their taxes will receive the acknowledgment via the same method. On receiving the acknowledgment letter from the IRS successfully, you can then visit the IRS website to track your application. You need to visit the IRS website and look for the “Where is my refund?” option. Once you fill in the necessary details, you should be able to track your application and its status. However, you will not be able to track the status of previous year filings or tax return files with amendments.

Tax Refunds

While filing up the tax returns, you need to specify a mode for refunds, if there are any. The only two modes available are a direct transfer to the account or mailing of a cheque. Even IRS prescribes using the direct transfer mode, as it eliminates any chances of the cheques getting lost in transit. Also, direct transfers allow for a much faster turnaround time. If you are expecting a tax refund and have opted for the direct transfer mode, the same would be reflected in your account in less than 21 days once you file the tax returns. For all the individuals who opted for physical tax returns or cheques, the time taken is relatively longer. The refunds usually take about 6 weeks of time. You can enter the details of the mode of refund in your tax return form under the Refund section. You can enter the same when you are filing for tax returns using websites as well.

In some cases, individuals do not receive their refunds within the allotted time. If you are facing such a situation where you haven’t received your direct transfer refunds in 21 days or physical refunds in more than 6 weeks, you should reach out to the IRS.