The time of year we have all been waiting for is finally here. Well, for about 150 million Americans, in any case. Tax season and the annual ritual of reconciling how much we earned, how much tax we owe, and the big question of whether we get a refund or have to write a check is finally in full swing! Every year the rules are different and other considerations related to filing your tax return and paying the least you can or getting the biggest refund you can are changing and constantly new and confusing, so like most taxpayers, you probably have a lot of questions. Here are some of the most commonly asked questions I get about tax returns.
Do you have to file a tax return?
Not everyone has to file a tax return. That's right, if your income is below certain limits, called minimum filing requirements, you don't have to file a tax return. Many people worry they will get in trouble with the government if they do not file a tax return -- even if they do not have to -- but that is simply not true. The IRS doesn't require you to file if you don't have to. However, there are still times when filing a tax return is a good idea even if you do not owe taxes. If your employer, or retirement plan administrator, withheld taxes you can only get those taxes refunded by filing a tax return. If you are eligible for the Earned Income Tax Credit, the American Opportunity Credit, or the Additional Child Tax Credit, you should file a tax return to get your credit in the form of a tax refund. All of these are most certainly a good reason to file a tax return.
What is the best way to file?
Electronic filing, or e-file, is the best way to file your tax return. It is also the most popular way with more than 80 percent of taxpayers electing to file their tax return with IRS electronically. E-file is a faster, more accurate, and safer way to file your tax return. Not only does the IRS process your return faster when you use e-file, but the process of transmitting your return from a secure site to the IRS secure site greatly reducing chances for human error when your return is input into the IRS computer. Your return is more secure because there is less human intervention and chances for someone to steal your tax information. E-filed returns receive an acknowledgement of receipt by the IRS that includes the date and time the return was received. Returns are immediately put in the processing queue AND this allows a refund to be issued faster than if you mail a paper return. If you must mail your tax return, make sure you send your return certified mail to ensure your return doesn't sit in an untended mail box where thieves are waiting for just such an opportunity to steal your identity.
How should you get your refund?
The most secure way to get your refund is to request a direct deposit straight into a bank account that you have checking or savings or other. Your money is transferred directly from the United State Treasury to your bank and your account based on the bank account number and bank routing number you enter into your tax return. And with direct deposit of your refund, the money you receive is available as soon as it hits your account. What could be easier or safer or faster?
Where do I go to get tax questions answered and where is my refund?
Due to a continuing shrinking budget at the IRS, many taxpayer services have been eliminated or reduced. Officially launching the 2014 tax season on January 31, 2014, Commissioner Koskinen noted the IRS phone lines will be extremely busy with frequently extensive wait times due to a limited budget. To help alleviate your frustration, check online first by using the "Interactive Tax Assistant" for answers to tax law questions.
If you are checking on your refund, use the IRS online application "Where's My Refund" Wait at least 24 hours after the IRS has acknowledged your tax return and be aware IRS only updates the site once a day. While most refunds are processed and sent in less than 21 days, the IRS asks you to wait at least four weeks after the IRS has acknowledged your return to call for a status on your refund.
I got a phone call/email from the IRS asking me to send them my personal and bank information what do I do?
If you get an e-mail or phone call that seems to be from the IRS, know that the IRS does not initiate contact with taxpayers to request personal or financial information through e-mail - NEVER. The IRS also does NOT request personal identification numbers (PINs), passwords or other types of confidential access information for credit card, bank or other financial information. If you receive an e-mail from the IRS that looks suspicious or requests personal financial information, do not click on any links or respond. Instead, forward the e-mail to email@example.com or contact your favorite tax return preparer and ask them to check it out. You should have a favorite tax return preparer - even if just to ask questions from time to time. If NOT, you really should find one... and NOT your Uncle Bob or that guy at work that "knows taxes"... unless he or she really does know taxes.
Finally, if you need help with your tax return or have questions about taxes, be careful who you choose to talk to. Make sure the preparer you are talking to has an up-to-date IRS issued personal tax identification number (PTIN) which all paid preparers are required to have and renew each year. In addition, choose a tax preparer who receives annual tax training to stay up-to-date on tax law changes and to increase their tax knowledge.
Your taxes and your money are very important and your tax return is likely to be the single most important financial transaction you work on each year. Be sure you use all of the tools and resources and best practices that others use to get the most money you can and pay the least amount of taxes you can. The tax rules are complicated and even great software may leave you with questions or confusion and the possibility of making a mistake or worse leaving your money with the government unnecessarily. Take the time you need and focus on your taxes - this year and every year and get the biggest best refund you can and as soon as you can. It IS your money. Get your money.