3 notes about your IRS tax refund
Nearly 50 percent of US tax filers will be due a refund this tax season and that number continues to grow.
It used to be that only a few low-income filers who did not claim enough on their W-4 forms during the year were issued refunds. These were people who had actually paid too much money to the IRS via paycheck withholding. In fact, a refund was often seen to be a sign of poor tax planning: i.e. a person had set up their withholding incorrectly and thus gave the United States government an interest-free loan for a few months. In those days, it was actually desirable to have a “tax due” at the end of the year. There are still tax payers who seek to have a tax liability at the end of the year, but they are higher income earners and that group is shrinking in terms of population. The reason for this is that politicians have started to add deductions, credits and incentives to our tax code to the point where it is common for families making over $50,000 annually to be issued a refund.
If you are one of those individuals who qualify for a tax refund this year, here are three ideas of which you should be aware:
Refund v Return
Pet Peeve Alert! If you are getting money back from the IRS, that money is called a refund. A tax return is the paperwork that you filed with the IRS. A refund is different than a return. I often hear people say that they are looking forward to getting their tax return from the IRS. Ummm . . . no, the return is what you sent to the IRS, the thing that you are looking forward to getting back is a refund. A tax payer files a return, they deposit a refund.
Thanks for letting me get that out.
Since the advent of the ability to e-file one’s taxes, refunds have come a lot faster. Back in the days of filling out a return with a pencil and filing via snail mail, it would take six to eight weeks for a refund to be processed. In recent years, if a tax filer used E-file and had the money directly deposited, refunds were often processed in seven days . . . but not necessarily this year . . . The IRS has announced that refunds that used to take 7 to 10 days might take more like 14 to 21 days this year due to software updates and new fraud prevention efforts. This delay will primarily affect early filers (January-February) who use the 1040 form.
During the past three tax seasons, my refund was processed in less than 10 days, but I just found out that this year’s refund is going to take close to 22 days. How did I find this out? That answer is next:
Where is my refund?
A few years ago, the IRS set up a way for people to obsessively check the status of their refund. If you go to this page and enter your social security number, filing status and refund amount, the IRS can then tell you the date that they estimate your refund to be deposited or mailed. The IRS recommends that people only check this page once a week . . . but if you are the type of person to check this kind of thing twice a day, it keeps them from having to answer the phone.
I have found this service to be fairly accurate over the past three years, although there are times when the volume is so high that it cannot keep up. Also, this database seems to be updated on Wednesdays. Many people have reported that the information changes or is most accurate on or immediately following Wednesdays.
Spend that refund wisely!