5 Basic FAQs About Tax Refunds Answered
Probably the only good thing about the tax season that comes every year is receiving the tax refund from the IRS. Depending on your income and withholding, you can get back almost $3,000 as a tax refund, and all of it comes as a chunk of money that is often unexpected and unplanned. So, if you are looking forward to getting a refund the next tax season or still unclear about how the tax refund system actually works, here are 5 FAQs answered for you on those lines. Just filing the tax return can seem complicated, butwaiting or receiving the refund can be confusing too.
1. How do I know if I will get a tax refund or not?
Employ an online tax estimator like the TaxCaster that takes in all the relevant data and helps calculate your tax burden. A tax refund generally comes to employed Americans who had decided to pay a particular sum to the employer as taxes every month from their salary through the W-4 form. If you have overpaid than the amount you owe in taxes, then you will receive a return from the IRS. Certain factors like non-taxable investments, family dependency affect your taxable income. TaxCaster can give you an estimate.
2. When will I get my refund?
As per the IRS, American citizens who have filed their tax returns by the due date should receive their tax refund within 21 days of submission. If you opt for the refund to be directly deposited in your bank account, you should receive your money by that span. However, if you are expecting a check in your mailbox, the period may stretch due to postal delays. IRS says that if you do not receive your tax refund even after 6 weeks, you need to contact the relevant authorities at the IRS.
3. Can I not receive my refund even if I am eligible for one?
In other words, can the IRS deny your tax refund? Technically, it cannot. But there have been cases where the IRS has withheld tax refunds of few citizens who had outstanding loans like student debt or child support where the premiums have not been paid timely. You can always track your refund in the IRS’s “Where’s My Refund?” portal if you are unsure about what happened to your refund. If your debts are timely paid, the IRS cannot deny you the refund it owes you.
4. How can I increase my tax refund?
There is no secret sauce to increasing your tax refund. One, keep track of your finances and save the receipts of every activity that has the likelihood of being exempted from taxes. Two, keep your W-4 form updated with your employer, and be sure to include all your major life changes like marital status and having children. Lastly, take professional help to review your tax returns to ensure that you have covered every exemption that you deserve. These will help you to get back a higher return.
5. Do I need to file for an extension if I know that I will get a tax refund?
If the IRS owes you a tax refund and you cannot file your tax returns by April 15, you do not have to file for an extension. The 5% penalty is only levied on taxpayers who owe taxes to the IRS and cannot file tax returns by the given deadline. However, if you are unsure whether you are eligible for a refund or not, file for the extension anyway. The process is fully automatic and it does not change anything for you if you are eligible for a refund.
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