Income Tax Refund
Best Ways to Approach Your Income Tax Refund
The happy holidays are over, and income tax time is again upon us. In fact, the IRS reported a smooth opening of the tax filing season on January 19, 2016. The IRS expects that over 150 million taxpayers to file in the late winter and spring before the cut-off date of April 18, 2016 (April 19 in Maine and Massachusetts for the Patriots Day holiday). Of those, 70% will receive money back comparable to last year, with dollar amounts averaging $2797. How can you as a U.S. taxpayer learn the best ways to approach tax season and the best way to get this year's refund?
1. Get help.
The tax code is a maze of laws, changes to laws, details and confusing jargon. The best way to navigate how it works is with help. IRS representatives in the tax office or on the phone are willing and able to help. However, if you are able to pay for professional advice, seek out a tax professional early in the season, when he or she won't be swamped with everyone else's books. If you usually file yourself, chances are you use a reputable online tax filing service or software. If you need help during filing, there's typically a "Help me" button that can serve to answer questions and even begin a conversation with a tax professional. The bonus to getting help is that most likely you're going to optimize the amount of your money back, and more money in your pocket is always a good thing!
2. File for free.
For over 100 million Americans making less than $62,000, filing can be free. Through the IRS website or through 13 brand name tax software providers serving as partners, the Free File Alliance can eliminate the cost of filing federal income taxes. Although it's up to the discretion of the provider, it can also provide state filing for free or at a reduced cost. At Free File, taxpayers can choose from one of thirteen reputable from a variety of industry leading taxware filing options.
3. File early and online to reduce chances of refund fraud.
Income tax fraud continues to be a concern for income tax filers. It's essentially identity fraud, so if someone has access to your name, social security number and date of birth, you may be at risk. To reduce risk, file early and online through a secure website where your information is much less likely to be compromised. Signs you may be a victim include having your tax return rejected by the IRS because it has already been filed, not receiving tax money back, seeing suspicious activity on your credit report or owing extra taxes due to unreported income. Of course, each year the IRS and its Security Summit work to provide even more advanced protection for taxpaying citizens, and this year is no exception. Although many improvements will be invisible to taxpayers, you may see increased security requirements when you sign in to your tax software account.
4. Use direct deposit.
Combining e-filing with direct deposit means that you're getting your money as quickly and as securely as possible. You can check its status every 24 hours online, and even though the IRS allows 21 days for processing, in reality, it's a rare occurrence. For every 10 filers, 9 will get their money directly deposited before the 21 days have passed. State refunds work on a slightly different schedule, but still tend to be deposited in a fairly efficient manner.