You may not be thinking of it right now, but come tax time you’re going to be all over it! What we’re talking about if course is your IRS refund. Every year millions of taxpayers file their federal tax returns and expect a refund. The arrival of the refund payment is like winning the lottery for many people, since it’s often the largest chunk of money they’ll ever see at once, outside of a nice paycheck with overtime.
Therefore, after tax filing season begins there’s a frenzied rush to wait for refunds…yes it’s a hurry up and wait game where there’s really nothing the taxpayer can do to speed up the process once the tax return has been filed.
But what about before taxes are filed? Is there anything taxpayers can do to help speed along the processing time of their return? Yes and no, according to the IRS. You can do things which will help avoid having your tax return delayed (we’ll give you a short checklist of things below). You see, although there’s no set time period any more, letting taxpayers know when to expect their refund, there is a window of time during which it’s reasonably expected you should receive your refund.
So here we go: things you can do to help ensure a timely arrival of your IRS refund so you’re not asking Where’s my refund? week after week and wondering what happened.
- Check for typos. The slightest discrepancy in the way you spell your name or if you get your SSN wrong (heaven forbid) will send the IRS tax return processing computers into a tailspin…”Fraud Alert! Fraud Alert!” is what that type of type screams out to them.
- Beware the Home Office Deduction. This causes more tax returns to be double-checked since it’s definitely an area where taxpayers often make mistakes (intentionally or not, they’ll get your tax return hung up in the works for long periods of time).
- Report ALL your income. If you forget a W2 or a 1099 that’ll pretty much guarantee that your IRS refund will get delayed. You see, the IRS knows about all the reported sources of income you get because they get copies of all your W2s and various types of 1099s, too. When you file your taxes they expect them all to be there and if they’re not well they’ve got you…sure fire way to slow down the processing of your tax return and delay your refund indefinitely until it’s all cleared up.
- Don’t take too large a deduction for Charitable Donations. That looks so suspicious in the eyes of the IRS! Giving $100,000 to charity that year? Well the IRS doesn’t believe anybody’s that generous (and neither do we!) so they’re going to investigate the heck out of that one.
- Claiming a loss on rental property. So many people got involved in real estate during the boom and bust that the IRS started having to investigate further lots of the real estate claims on taxpayers’ returns. Turns out people are trying anything they can think of to pull money from their real estate, including claiming fraudulent “loss’ on rental property. Well even if you truly had this type of loss, you’ll suffer because this is something the IRS really investigates nowadays…hence a delayed tax refund from the IRS.
Love checking the status of your federal tax refund? Then if you don’t already have the IRS’s new IRS Tax Refund Tracking app, you’re missing out. It’s called IRS2Go and it’s available for both iPhones and smartphones with Android.
IRS Tax Refund Tracking Made Easy
The primary use for IRS2Go is tracking your IRS tax refund status. Once you’ve given the app a few key pieces of personal information so it’s been established that it’s really you requesting the info, you can get up to date info on what’s happening with your IRS refund. Here’s what to do:
- Enter your Social Security Number
- Choose your filing status from a short list- only you would know this so it’s really a type of security question
- Enter a number: the refund amount you’re expecting. Again, only you would know this since it’s taken directly from your tax return.
Now you can obsessively check the status of your IRS tax refund any time, any where you have cell phone reception.
When Can I Use the App?
After you e-file (submit your tax return electronically rather than mailing in a paper form) wait 72 hours (that’s 3 days) then your info should be in there for checking.
If you filed a paper return then it really doesn’t make any sense that you’d be using the app…think about it. But if you find yourself in this oxymoronic situation of having filed your tax return using the ancient paper method, but then wanting to use the latest digital technology to check your refund status, feel free…but you’ll have to wait three to four weeks before you can do so!
On that note, if you did file a paper tax return you’re now in the minority. 70% of taxpayers filed electronically in 2013*.
Other Things You Can do With the IRS2Go App
Besides performing some IRS tax refund tracking, you can also get daily tax tips. Ooh doesn’t that sound like fun! To get this exciting feature going, simply give the IRS your email address and you’re ready to go. Get reminders and tax tips written in plain English (or as plain as the IRS is able to make them). Learn about exciting topics such as:
- child tax credits
- education credits
- free tax help
- the EITC (Earned Income Tax Credit)
- the Home Office Deduction
- the Standard Deduction for the current tax year
- the Personal Exemption for the current tax year
- IRS tax brackets
- and much much more
*source: the IRS website.
Although you may not be thinking of your IRS tax refund status right now, it might be worth a minute to browse these tips. They could save you some aggravation come tax time next year. What we have here are 3 IRS tips you probably don’t know…take a look:
1. Check out the New Simplified Home Office Deduction. Used to be, if you had a home office and wanted a deduction for use of your home and resources to run that space, claiming that deduction was quite the process. The IRS hasn’t relaxed its rules a bit…you still must be sure that no other activity goes on in that deducted office space except office-related business. You can’t put a guest bed in there, for example because then there’s debate about whether it’s a home office or a spare bedroom.
You also must use the office regularly …not just once a year to file taxes! Also, if you watch movies on your home office computer, technically you’re violating the rules and it’s not exclusively a home office any longer. They’re very strict on this.
But what the IRS has done is make it wayyyyy easier to claim the deduction in the first place. Turns out lots more people have home offices now…blame it on the recession. In the past, taxpayers had to fill out IRS Form 8829 but now all you have to do is fill out a worksheet that comes with Schedule C. Take the square footage of your office space and multiply that by $5. You get to deduct up to 300 square feet, which is max of $1500 per year.
2. Do it Yourself. Nowadays with the advent of awesome tax filing software and the home PC or tablet, most individuals can easily and quickly (not to mention cheaply) file their own tax return with the IRS (and states). Paying someone to do it for you opens you up to the ever-growing risk of tax fraud. You see, the profession of tax preparer is loosely regulated, and every year thousands of taxpayers turn over their personal data to scammers who then file fraudulent returns and keep lots if not all of the client’s tax refund. Do yourself a favor and file for free online with any of the major tax prep companies.
3. Get Medical Insurance. The fee for not having medical insurance in 2014 is only $95. Some of you may have forgone a policy simply because the penalty isn’t that bad. Beware, however: that fine goes up each year…by a lot. Get it now if you haven’t already because the fine will be upwards of around $700 come 2016.
Are you expecting a 2014 IRS Tax Refund? Before you spend it on $300 jeans or a flat screen TV, consider spending your refund in the following ways. It could mean a lot to your future self!
- Start an IRA. No really, it’s a smart way to invest an extra stash of cash like an IRS refund. Put it in a retirement account and you’ve discovered a pain-free way to save for your golden years. It’s pain free because you’re not taking money from your regular paycheck (you’ve already done that by having too much taken out in the first place, which is why you’re getting an IRS refund). You won’t even miss it.
- Join Lending Club. If you’ve got cash to spare, then consider peer to peer lending. You front the cash, and Lending Club finds people who need loans. You get pretty good returns because of the interest rates the borrowers pay. It’s risky since it’s not insured by the FDIC. Same as stocks…there is risk involved.
- Pay off existing debt. Of course this option should have been option number one. The golden rule of personal finance is that debt comes first. No matter what expenses you have, debt is what you should pay off first. Even if your 2014 IRS tax refund is a few hundred dollars and you owe thousands, paying off just that amount will help you save in interest payments right away.
- Put it in a Health Savings Account. You can get cheaper health insurance if you have an approved Health Savings Account (HSA) and a high deductible insurance plan. The money you put into this account is tax deductible. That means less taxes paid by you!
- How about just save it? Did you ever consider that? You don’t have to spend your tax refund at all. Not all money needs to be spent right away. Just let it sit in a savings account for future needs. Radical, right?