For those who are not familiar with the term tax refund, you must know that tax refund refers to the fund returned to the taxpayers when the amount is more than their tax liability. The refund is paid within three weeks or less by the Internal Revenue Service (IRS), which is the federal agency that is responsible for collecting the tax of the whole country.
When you file your income tax returns, within a few weeks, your tax fund is paid to you in check, as a savings bond, or transferred to the direct deposit section of your IRS account.
The types of taxes you can claim returns on are as follows:
You can claim tax refunds on almost all types of taxes. Some of the most common types of taxes that can be claimed for refunds are as follows:
- Federal tax refunds
- State tax refunds
- Federal Insurance Contributions Act (FICA) tax refunds
- Local tax refunds
- Exchange and student visa holders’ tax refunds
- Skilled workers’ tax refunds
How to plan your tax refund
Many citizens who pay taxes keep waiting for their tax refunds but never get it. This brings us to the point that it is first essential to check if you are eligible for tax refunds or no. Here are some important steps for getting your tax refund:
Chart out a plan – If you have decided to file your tax returns, keep all the necessary documents ready for a smooth process. Preparation of the taxes is essential as a minute error in the return taxes sheet can affect your tax refund. Note that the more you delay the filing of your tax returns, the more the delay in getting the tax refund. Moreover, it is best to make use of the E-filing system as the manual filing system would consume much more time.
Claim the tax benefits right away – Every citizen according to his or her income is eligible for certain tax deductions or tax credit. Make sure that you are aware of your tax breaks so that you can show your tax credits and get away with paying more taxes than you are liable for.
Consider spending on IRA – If you want to reduce your tax liability, then you can consider investing in the Individual Retirement Account (IRA), until 15th April of every year. This is a good tax strategy that will help you save money.
Hire a professional tax professional – Filing your tax returns for the first time can be confusing, so if you feel like you are in a fix, it is best to hire a professional tax professional. A professional tax preparer will help you find a way to reduce your tax liability yet make sure that the tax returns are within the limits of the tax code followed by the federal government.
Can you control your tax refunds?
Yes, you can control and manage the money you get in the tax refunds. A tax refund is the excess of money you get back if you had paid a large amount as the withholding tax.
If you are getting a significant amount as your tax refund, then it is not a good thing. You must keep in mind that tax refund is like an interest-free loan that you give the IRS, which the agency returns within few weeks of filing the tax returns.
By tax deduction and filing your tax returns smartly, you can ensure that you pay exactly how much you are supposed to pay. It is not possible to pay the minimum amount as your tax returns because if your tax returns are below your liability amount, then you might have to pay some penalty charges or interests.
The best thing to do is to calculate your actual tax liability and try matching the tax returns in the files to it.
What causes a delay in receiving tax refunds?
Mailing your tax returns
If you mail your paper tax returns from a post office, it takes approximately around 6–8 weeks for you to receive your tax returns. To avoid this, switch to E-filing that gives you the Direct Deposit option. This option gives you your tax refunds within three weeks or less.
Error in the form
If there is an error in the tax form from your end, then the tax filing process might slow down. If there is an omission of any personal details, then you might have to file an amended return that will cost you more time.
Wrong calculations or mailing the tax returns to the wrong address can lead to a delay in receiving tax refunds.
What things will you need to check your refund status?
If you have filed your tax return online, then you will receive your tax refunds soon. You can check the status of your tax refund on the official website of the IRS. To do so, you need to know your social security number, your filings status, and the exact refund amount that was mentioned in your tax returns sheet.