A tax refund is a return of money you’ve given to the government during the year; it happens when your total withholdings and estimated payments are less than what you owe (or if you’re eligible for and claim certain credits).
There are many benefits to collecting a tax refund. For example, not only do most people have an incentive to keep their withholdings as low as possible because they don’t want to spend more money than necessary each month, but some people also look at their tax refunds as free money from Uncle Sam. In addition, getting a tax refund can be a great way to build up an emergency fund since collecting one doesn’t have any adverse effects on your credit score, and you don’t need to wait until the following year for it.
Filers who overpaid their taxes during the year can expect to get a refund. You’ll need to file your return to receive what’s owed by both state and federal governments, so don’t think of this as “free money” – it is already yours!
The standard time frame for processing refunds is approximately 3-4 weeks. If you filed electronically, your refund would be processed up to 4 weeks after the IRS acknowledges receipt of your return; otherwise, it may take 6-8 weeks.
The speed of your tax refund will depend on several factors, such as how long it takes the IRS to process your return and whether or not you’re eligible to get a more expedited option (e.g., if you file electronically). For example, the average time frame for an electronically filed return is around two weeks. However, if you file a paper return, the process will be a bit more complicated, and it may take up to 12 weeks from the date they receive your tax return until you get your refund.
Several things could be holding up your refund, but some problems are more common than others. Here’s what you should know about the most common causes of tax refund delay:
1. Identity verification – If you claimed the earned income tax credit or filed a return for a deceased person, your refund may be held up while the necessary identity verification is being done. Don’t worry; this does not mean there’s been an error in your tax return or that you owe taxpayers money.
2. Incomplete return – This means the tax return was not complete. For example, it did not include all of your tax information or had an error in the Social Security number of the person who claims you as a dependent. Incorrect PINs may also cause delays. If you think this is why there’s a delay in processing your return, check to see if there are any obvious errors on the form before resubmitting it.
3. Credits – If you claimed credits, such as college expenses or child tax credit, it might take the IRS more time to verify that information.
4. Refund offsets – If you owe past-due federal loans, state taxes, or child support, your refund will be used to pay off what you owe before getting money back. Again, this is not an error in your return, but a delay can result if you don’t provide all the required verification information.
5. Financial holds – The IRS intentionally selects some returns for an additional audit review based on specific financial triggers, such as high claimed deductions compared to your income. These returns are not always chosen due to an error on the return, though it may delay. The trigger could also be based on things reported by other taxpayers.
6. Missing Forms – If your employer did not provide the necessary tax forms (e.g., W-2, 1099), your return would be processed without them, and they will appear on an IRS Letter 53 document which says that we don’t have information to process this return.
7. Refund delay in filing – In some cases, a refund can be delayed if you do not file your federal return while you file your state return. If you are expecting a refund from both your federal and Oklahoma income tax returns, make sure to submit them at the same time to prevent any delays with one of the refunds.
You should first check the Where’s My Refund? tool on IRS.gov. Suppose you can access your tax return information using this tool. In that case, your refund will likely be processed within three weeks or less after the IRS acknowledges receipt of your electronic return.
Once your taxes have been submitted, the timeline of how quickly you’ll receive a refund is entirely dependent on what the IRS has discovered. However, some things may expedite the process and make it less stressful:
• File your return electronically: The IRS recommends that you file electronically because it is the fastest way to get your tax return processed.
• Set up direct deposit: If you choose direct deposit, your refund will be electronically deposited in one to three weeks.
• Double-check your tax return before you file: Double-checking your tax return before submission can ensure that the IRS doesn’t delay the processing of any refunds you’re owed.
There are many ways to increase the size of your tax refund, ranging from changing the number of dependents you claim on your W-4 to adjusting how much money you withhold each month. You can either do this by filing a new Form W-4 with your employer or increasing the number of allowances you claim on Form W-4P if you’re self-employed. Note that claiming more allowances may result in getting less money each month, but at least it will mean that your total withholdings and taxes owed during the year will be lower.
Tax preparation fees are the costs you incur to have a tax professional or software prepare your return. This fee can vary depending on how complicated or straightforward your return is. Other services that may be included in this cost include electronic filing and form preparation. Generally, the more complex the return, the more you’ll pay for tax preparation.
Unfortunately, tax preparation fees are not deductible, including the cost of filing your return electronically.
While tax preparation fees can’t be deducted for personal taxes, they are considered an “ordinary and necessary” expense as part of your business expenses. Self-employed individuals can remove the cost of tax preparation fees, but they’ll need to meet the following criteria:
• An independent contractor or sole proprietor who files a Schedule C
• A farmer (who has filed Schedule F)
• A landlord: earns income from rental properties (has filed Schedule E)
• An individual who earns income from royalties (has filed Schedule E)
If you fall into one of these categories, it is essential to remember that you may not deduct the entire cost of your taxes. You can only claim an accrued amount by preparing business-related taxes, with any remaining expenses falling under personal income tax categories like standard deductions and credits.
If you want assistance to ensure that you’re filing your return accurately, consider hiring a CPA or enrolled agent. These professionals have earned the right to practice before the IRS and can help provide professional advice if you need it. Hiring an experienced agent will simplify your tax process. You can rest assured that they have filed all of the appropriate paperwork for you and know precisely where each deduction applies, so there are no surprises come filing time.
It depends on how your tax return is processed. Typically, if the IRS or a state agency accepts and processes your filing, you can expect to pay around $100 for an individual return and slightly more for a joint return. However, keep in mind that this may vary depending on which software you’re using or if you’ve hired a professional.
Tax refund delays may be due to pandemic-related problems within IRS. If this does occur, the tax agency promises that they will be working to provide taxpayers with updated information on their tax filing status.
If the President’s budget proposal is approved, tax refunds could be delayed for everyone. The new plan includes a $1.5 trillion cut to the U.S. deficit over ten years, but sources say it could also result in taxpayers waiting longer than usual for their refund checks next year.
The budget proposal includes a change to the withholding tables for employers. If this passes, you could end up having too much money withheld from your paycheck. This would essentially be like giving the government an interest-free loan because instead of getting that money back as a refund during tax season, you’d get it back in your paychecks throughout the year.
Yes, tax returns are taxable. Taxable income is the number of your yearly earnings subject to taxation by federal, state, or local governments. Whether you file as an individual or jointly with others, you’ll be taxed on the total amount of your taxable income.
Tax collection agencies and the IRS can garnish tax returns. If your tax returns are not submitted on time, it could result in penalties and interest charges through the IRS. These late fees and fines may include a flat rate or percent penalty, usually computed to how many months you’ve been delinquent on filing taxes.
Tax collection agencies, the IRS, and creditors may garnish your refund in an attempt to collect a debt you owe. Garnishment is the court process that lets a creditor manage money by getting it from a garnishee. One way that they may do this is by garnishing your tax refund.
The Treasury Offset Program (TOP) is a way for the federal government to make sure that you pay your taxes. When people or businesses have overdue debts, TOP identifies them and uses money from agencies like an income tax refund certificate to take care of these delinquencies. You may be unaware of it, but the U.S government has the power to garnish your tax refund as payment for debts owed by federal and state agencies.
Typically, TOP can’t seize all of your income tax refunds, and it may be able to take up to 15% of the money owed. The federal agency will focus on collecting debt that’s due immediately and where it makes more sense for them to intercept the payment than wait until you file your taxes. When this takes place, you could receive some notice about TOP and how it works, so there are no surprises when you discover some or all of your tax returns had been taken by the U.S government acting on behalf of a state or federal agency.
The IRS will only garnish tax refunds to pay off certain kinds of debt such as:
• Federal Student Loans
• Back taxes
• Unpaid child support
• Any other debt owed to the federal or a state government
An amended tax return is a completed tax form that you submit after the initial filing. The updated, revised or corrected information will be reflected on your next federal income tax return so especially pay attention to any math errors.
You can submit a tax amendment if you notice an error or omission on your original return after it’s been filed. If you need to change or amend your income taxes, here’s how:
Get in touch with the IRS and provide them with specific documents such as the 1040X form (Amended U.S Individual Income Tax Return), which needs to be filled out and submitted within three years from when the original return was due; or
Submit a signed statement that has all of your changes. Be sure to include information about why you’re submitting an amended tax return. Include your signature, address, and telephone number where the IRS can reach you quickly if they have any questions regarding your documentation.
You can amend your tax return electronically, but that doesn’t mean you should. The IRS allows you to make changes to some 1040 forms online. The IRS website does not recommend doing this since any errors could cause more problems for your future tax filings instead of correcting them.
If you owe money after amending your tax return, it’s best not just to pay the extra amount with your amended return. Instead, use an IRS Direct Pay to send in a payment for the difference between what you initially reported and what the corrected figures are.
When you have a negative tax basis in an investment, it means that the amount of money you spent when purchasing the asset is more significant than what you received when selling it. Negative gains and losses can occur for many reasons:
You experienced a loss because your broker didn’t follow all investment advice and instructions.
You experienced a loss because of fees associated with your account.
You experienced a loss because the plan for which you invested wasn’t run appropriately.
The stock market took a significant nosedive while you owned the stock, hurting its value.
Your taxes on capital gains are larger than what your broker reported or advised to you, which increases your tax basis.
Although a negative tax basis occurs every year, it’s essential not to ignore this issue since it can lower your future investment income if not appropriately handled. It can even impact how much money you’ll need in retirement funds based on IRS rules that govern the required minimum distributions (RMDs). If you’re facing a negative tax basis that is affecting either current or future investments, you might want to take a closer look at your returns from the past few years.
A capital account is not increased or decreased by partnership liabilities, and a partner’s share of losses is never permitted to result in a negative basis for his interest. Still, he may have either an excess amount due to distributions that were made by others during the time frame covered by this statement (i.e., before activities began).
A tax credit is often smaller than a deduction but can do more to reduce what you owe (or increase your refund) since it’s subtracted from what you owe. For example, if you owe $4,000 and are eligible for a $1,000 credit, you’ll only have to pay $3,000.
Tax credits are usually applied to the amount you owe (which makes them like deductions). They can change with each tax year and depend on your income, where you live, what type of work you do, etc.
Nonrefundable tax credits: Credits that can reduce a tax you owe to zero but cannot create a refund for any excess credits.
Refundable tax credit: Credits that provide a refund for all or part of an excess amount of the allowable credits, up to the total amount of tax withheld and other payments made.
Partially refundable tax credit: Credits that provide a refund for part of an excess amount of the allowable credits.
Tax deductions (also called “above-the-line” deductions) reduce your taxable income, which in turn reduces your income tax, while a tax credit reduces the actual amount you owe in taxes. For example:
A deduction of $1,000 reduces your taxable income by that amount, while a tax credit of $300 is a direct reduction in the amount you owe the IRS.
A carryforward is a tax credit you’ve earned but can’t use (for whatever reason), and it’s carried over to the next tax year, where it will be available for you to apply toward your future tax liability.
If you’re not able to use the credit in a particular tax year, it can be carried forward until you can use up all of it. This means that if you have any credits left over at year-end, they will carry over into the next year and reduce your taxes for that next tax filing season.
Tax Topic 152 is a lengthy document listing the ways you can receive your refund. When checking on your refund, if you see a message saying “Tax Topic 152” with no other information, this means your return has not been processed yet. The IRS is currently processing returns and will resolve these notices as the information becomes available.
A tax bracket is the percentage of your income that will be paid in taxes after you’ve calculated your adjusted gross income (AGI) and any deductions or exemptions.
Tax brackets work by taxing income as it is earned and allowing you to keep a little more of your earnings than before. For example:
You receive $5,000 in taxable interest and fall into the 15% tax bracket; therefore, you’ll pay 0.15 on that entire amount—which equals $750.
The first dollar of your first $9,525 (the amount above which you will fall into the 12% tax bracket) only goes toward the 12% tax rate; all dollars above this will go toward the remainder of this calculation. The same applies to every other income level within each tax bracket.
The federal government determines the tax rates for each filing status (single, married, filing jointly, etc.). Once you know this rate, you can find your tax bracket.
It used to be that there were only three tax brackets, but in 2013 it changed to 4 different brackets because of the Affordable Care Act. Today there are five different income tax brackets: 10%, 15%, 25%, 28% and 33%. Since these brackets are progressive, they affect different income ranges differently.
There are two ways to determine your tax bracket:
– Look up the tax bracket table on the IRS website. For example, if you’re single and make $40,000 per year, the tax rate would be 15% for this amount of income.
– Use a calculator like Tax Year Calc to help estimate what your taxes will look like if you increase or decrease your income by $5,000. If you expected to get another $5,000 in taxable income next year, then increasing that amount would push you into the 25% bracket (and probably bump you down one tax bracket because of how progressive taxation works).
All taxpayers have a marginal tax rate based on the tax bracket you’ve earned your income in.
Income taxes are broken down into seven different marginal tax levels. The rate you pay depends on your income and the number of increments that have been taxed up until this point in time – for example, if someone earned $10 million over 20 years, they would owe 15% as opposed to 1%.
There’s a big difference between your marginal and effective tax rate; the only time they’ll be equal is when you make exactly enough to fall into a new bracket (in which case your marginal rate will equal your effective tax rate).
A capital gain occurs when an asset is sold for a profit or worth more than the asset’s original cost. This profit is taxable income to whoever made the profit and can sometimes be called capital gains if it pertains to security.
Capital gains tax is a percentage you have to pay on your total realized gains from either selling property or trading/selling investments at a higher price than what you originally paid for them. If your long-term investment in an item has dropped in value since you bought it, then this loss could be used as a deduction against other types of income when filing your taxes.
You’ll have to pay capital gains tax whenever you sell publicly-traded security, such as stocks and mutual funds. You’ll also owe capital gains taxes if you sell an asset for more than what you initially paid for it – except for real estate investment or business property, which are sold at long-term or short-term rates instead. This only applies if this gain is realized (meaning that the electricity has been turned off, your possessions have left your possession, etc.).
Remember: there are specific exemptions when selling certain types of assets, especially those used by businesses.
Tax dollars support essential government spending programs, public services, and other things necessary to the general community. These expenditures are divided into three main areas:
– National Defense – The Department of Defense includes all military branches.
– Protection — Law enforcement agencies, including local, state, and federal police forces, are part of this category.
– Public order and safety – This is where things like fire protection, disaster relief efforts, etc., come in.
There are also two other budget categories not included above: government/public administration (the salaries of public officials) and economic affairs (mainly focusing on business issues).
A tax deduction is an amount of money that can be deducted from your gross income before calculating your taxable income. Since this reduces the total amount of taxable income (and, as such, the percentage of income tax you owe), it’s a form of direct fiscal relief.
Tax deductions are usually associated with certain categories like expenses that fall into specific groups (such as health care or education). It’ll also depend on whether or not the deduction is general or something belonging to a particular group. For example, businesses and corporations filing their taxes will receive different deductions than individuals.
Tax deductions are a way to decrease your taxable income, which in turn will lower the amount of tax you owe. To claim a tax deduction, you’ll have to itemize all of your deductions instead of claiming the standard deduction. For individuals out there filing their taxes on a 1040EZ or 1040A form, you won’t be able to make any tax deductions.
There are two critical types of deductions: general and special. Available deductions apply to everything from home mortgage interest expense to job expenses and charitable donations, while special deductions only apply to certain people in specific situations. Common examples include medical expenses for those 65 or older (special deduction) and student loan interest expense (general deduction). In addition, some taxpayers can also receive special deductions for IRA contributions, alimony paid, and moving expenses incurred when relocating for work.
Tax credits are noticeably different from tax deductions, and they directly reduce the amount of income tax owed rather than offering indirect relief by reducing the amount of taxable income. In short, a tax credit is subtracted from the total amount that you owe, not from your taxable income.
Self-employed individuals get various deductions for things like business cards, insurance premiums, and home office expenses. Besides, self-employed people can deduct the employer portion of their Social Security and Medicare taxes (i.e., 15.3%). People who work under someone else’s employment usually don’t get this deduction because their employers already cover them; however, if you’re self-employed (meaning you file a Schedule C form every year), then you’re entitled to this tax break since your business doesn’t provide it for you.
Tax write-offs are deductions that you can claim on your tax returns for items like charitable contributions, casualty losses (e.g., theft or damage due to natural disasters), home mortgage interest expenses, and job expenses.
Tax write-offs vary depending on the type of deduction you’re trying to claim. For example, if you incurred a loss due to an insurance company refusing to cover your damages after a hurricane swept through your area, then this will qualify as a casualty loss deduction; therefore, all you have to do is fill out Form 4684 and submit it along with other forms detailing your individual income tax return (note: be sure that you’ve included Schedule A form). On the other hand, tax write-offs for charitable contributions can be a little more complicated. To claim these deductions, you’ll have to fill out a Schedule A form and include the organization’s required documentation to which you donated cash.
When you have tax write-offs, it lowers your taxable income. This means that the amount of money you earn is reduced by an itemized deduction, which reduces the amount of tax you owe on your income taxes.
Because there are several different types of deductions, each having its own set of rules and regulations, some people don’t like tax write-offs because they feel their savings aren’t enough (e.g., only certain people can claim them). Furthermore, since most Americans aren’t accountants or lawyers, many people find these various deductions complicated and confusing; therefore, some may not understand what they claim on their tax returns.
The IRS lets you write off many things. Below is a list of some: car and truck expenses, home office expense deductions, property taxes, health savings account deduction (HSAs), medical and dental fees (with 7.5% threshold), state and local income taxes, property tax on your primary residence, charitable contributions (to qualifying organizations) and student loan interest deductions to name a few.
Whether you’re self-employed or have employees, the IRS lets you write off nearly any reasonable business expense, and small businesses also get various tax benefits.