Big IRS Refunds
As an income tax service professional, I am often asked: “Why do my friends get bigger income tax refunds than I do?” And the answer to their question often lies with IRS Form W-4.
It never ceases to amaze me that accountants, C.P.A.’s and other income tax preparation professionals do not explain to their tax clients the connection between IRS Form W-4 and the size of the refund one receives at tax time. Generally, those who do take delivery of the big IRS refund at income tax time are most likely the ones that claim zero deduction allowances for dependents on their employer provided W-4 Form. The lower the number of allowances claimed on your W-4 the larger the amount of taxes that will be withheld from your take-home paycheck.
Increase Or Decrease IRS Refund?
A great many taxpayers unwittingly and knowingly use the allowances section of their W-4 as a method to accumulate money during the year, somewhat like a savings account. If you would like to increase or decrease the taxes being withheld from your wages then here is what you can do about it.
Ask your employer for a new IRS Form W-4, or you can download it directly from the IRS website at http://www.irs.gov/pub/irs-pdf/fw4.pdf. Form W-4 determines how many allowances (i.e. dependents) you wish to claim and how much will be deducted from your weekly or monthly payroll to cover the federal withholding tax. The W-4 instructions provide that you count yourself as one allowance, and if married, one for your wife, and one for each child. The more allowances (i.e. dependents) you claim the less the IRS will deduct through your employer’s payroll service from your paycheck. On the opposite side, the fewer allowances (dependents) that you claim, the more the IRS through your employer’s payroll service will deduct from your wages.
IRS Refund Saving Plan
My advice is to skip the “Personal Allowance Worksheet,” that is, skip questions A through H and go directly to Line 5, “Total Allowances,” and write zero. Yes, zero. Do not count yourself, your wife, or your children. The result is that more will be taken out of your check, thus, your weekly paycheck will be smaller; however, the benefit is that at the end of the year you will have accumulated substantial federal income tax withholdings and you will receive a larger IRS refund. I call this tip the “Forced Savings Plan.” After a few paychecks you will adjust to the lower amount of take-home pay and will not likely miss it.
If you are married, you probably marked the “Married” Line on Line 3 of W-4; however, next to it is a different and separate box entitled “Married, but tax at a higher single rate.” I suggest that you mark this box instead. By marking “Married, but tax at a higher single rate,” this instructs the IRS and your employer’s payroll company to increase the amount withheld for federal withholding. Again, the more federal income tax withholding that is deducted from your paychecks, the more greater the IRS refund you will receive at income tax time.
Another way to receive large IRS refunds can be found on Line 6 of Form W-4. Line 6 instructs the IRS and your employer’s payroll company to take an additional specified amount from your weekly paycheck. For instance, by listing a mere .25 on Line 6 of W-4, you can receive additional dollars as a refund from the IRS. And at .46, which is nearly 50 cents per 100 dollars per week you can receive an even bigger refund from the IRS; and…
Spending IRS Refund Extravaganza
Naturally, no one likes a smaller payday; however, if you are one of those individuals who can’t seem to save money for luxuries, such as, vacations, that big screen HDTV, or a down payment on your dream car, changing your W-4 is a sure method to help you start saving for those dreams through IRS refunds.
As always, before you take any action based on this or any information contained herein, or if you have legal or tax questions regarding your IRS refund, you should consult with a legal or tax professional.
Getting Your IRS Refund
The following is a quick guide to retrieve your IRS refund due to over payment of taxes.
Well, about a year has past and it’s tax time again. Your personal income taxes are coming due and the date will be upon you quicker than bubblegum at a bubble blowing contest. So now is the time to organize and prepare your documents, file your tax return and get your IRS refund. How much will you get back and how long it will it take to get it?
How Can I Estimate My IRS Refund?
If you want to know how much of an IRS refund you may get, start by collecting the information you’ll need in order to get an estimate. There are a number of free estimate sites out there (just do a search for “Tax Estimator” or “Estimate My IRS Refund”. To use them properly you’ll need the following information or have your close best estimates handy for input:
- Number of exemptions you’ll be claiming;
- Amount of your income from all sources;
- Information on any deductions, payments and credits.
The amount of an IRS refund you will receive will depend on the number of exemptions you claimed on your Form W-4 with your employer. The fewer exemptions you claimed, the more taxes that were taken out of your check. If this resulted in an overpayment of taxes you will receive an IRS refund. However, if you claimed more exemptions than you take on your return you may have underpaid and would owe taxes to the IRS. Also, if you had a significant financial expenditure or loss during the year that is tax deductible, you may have also earned a refund. And, if you are self-employed and didn’t make any estimated tax payments you may also owe taxes plus penalties.
There are several new deductions and credits available due to the Economic Stimulus Plan which may make you more likely to get an IRS refund.
How Do I File For My IRS Refund?
To file your income taxes most people are required to fill out some version of IRS Form 1040. Depending on your circumstances there may be a number of additional forms to file to properly claim your deductions or account for all of your income. The easiest way to ensure you are filling out and filing all the forms you need and claiming all the deductions you can is to use an online tax preparation site. . The site will ask you pertinent questions about your income, expenses and deductions and automatically fill in the correct forms for you. It will also allow you to e-file (electronically file), which allows you to receive your IRS refund much more quickly.
When Will I Get My IRS Refund?
When you’ll receive your IRS refund will depend on when and how you file your taxes. The IRS won’t guarantee the date of any refund. But, they do have a general cycle. For most returns, if it is filed between Friday and the next Thursday, an electronic direct deposit will likely be sent on the Friday of the next week. For example, if you file your taxes between Friday, Jan. 15 and Thursday, Jan. 21 the direct deposit will likely be sent on Friday, Jan. 29. If you have opted for a paper check to be mailed, however, the check won’t be processed and mailed until about a week later. In this example, that date would be Friday, Feb. 5. So, the fastest way to receive your anticipated refund is to choose their direct deposit option and e-file your tax return.
The IRS also has a way to look up the status of your refund. By going to the IRS website and clicking on the “Where Is My Refund?” link, you can enter some personal information that allows the IRS to find the status of your refund. Generally you can get this information around 72 hours after the IRS acknowledges receipt of your e-filed return, or three (3) to four (4) weeks after mailing a paper return.
You will need to provide the following information from your tax return:
- Your Social Security Number or TIN (Individual Taxpayer Identification Number);
- Your Filing Status;
- The exact whole dollar amount of your refund.
If you have requested a paper check, putting an incorrect address on your IRS return is one of the biggest reasons for a delayed IRS refund. Entering an incorrect routing number or account information is one of the biggie reasons for a delayed return if you have requested direct deposit. If you move after filing your tax return, be sure the IRS has your updated address. Before filing for your refund, be sure to triple-check your address and account information to ensure the likelihood of a timely IRS Refund.
You have already filed your IRS tax return but are still looking for the refund check to come, you are probably thinking “Where Is My IRS refund”? If this describes your situation, then you should better try on your own to track down your IRS Refund.
IRS Refund Direct Deposit
With a simple and easy process, you can do find out your IRS refund status and where your return and pending tax refund is in relationship to the entire filing process. You may have asked to have your IRS refund directly deposited in your bank account or preferred to have it snail-mailed to you but you still have way to track down your tax refund from the IRS. However, when you are e-filing your IRS tax return (filing electronically), and you elected to receive your refund by direct deposit, you should expect to get your refund check within about 2 weeks time frame.
Paper Return IRS Refund
The IRS states that if you file your tax return on paper and ask to get the refund by postal service snail mail, you can expect to obtain it in about 6 to 8 weeks. Just like when you enroll in debt management plan, you should track down whether your creditor is properly paid or not; in the same way as when you file tax return, you are able to track down the status of your IRS refund.
Rather than browsing far and wide, you can directly log on to official website of IRS ‘Where is My Refund’. Here you will get all updated information about your current tax refund as well as information about your previous tax years. This website is a secure website that you can trust to have authentic information. To get your desired information, you have to put your social security number, your marital status (single or married) and total amount of the refund you claimed on your tax return.
If you prefer, you can call the IRS to track down your refund. But here also you will be required to give that same information to a live person that is required on the IRS website.
Undeliverable IRS Refunds
Sometimes you may find that your local post office does not recognize your address or you may have entered the wrong address on your tax return, so your IRS refund becomes non-deliverable. In this case you have to renew your address with the IRS following the same system. You may ask for e-mail notification once your tax refund gets released. The automated system will notify you immediately upon mailing your IRS refund.
Are you looking for some inside information on the income tax refund? Here’s an up-to-date report from income tax refund experts who should know.
Those are the words that every taxpayer would love to hear, yes, you’re receiving an income tax refund. For many individual taxpayers those refunds can be obtained through Earned Income credit, a real refund of overpayment of tax, or through an overpayment from previous years. Once you determine you’re receiving a refund, there are several options for actually putting that money in the taxpayer’s hands. Standard paper filing, electronic filing with direct deposit, rapid refunds, and refund anticipation loans are the options we have the choice of exercising, and for many refund anticipating individuals, the rapid refund or the refund anticipation loan is the refund of choice.
Since the advent of the computer age, and the great invention of the internet, the Internal Revenue Service has been fairly quick to react to the benefit of electronic filing. The returns are filed much faster, refunds are made faster, and money due the IRS can be obtained faster. Let’s take a minute to look at the different refund options, and what each offers the individual taxpayer.
Electronic Filing Makes IRS Refund Fast
The standard paper filing, although many are more familiar with this method of filing, is slowing reaching obsolescence. There will soon come a time that the old system of paper filing will be entirely eliminated and replaced by the electronic filing methods. If you are still one of the dying numbers of Americans who files a paper return, you should anticipate receiving a refund in about 6 weeks; today, thanks to the great use of the internet, 6 weeks to receive your money, seems like an extremely long time for arrival of the “IRS Refund“.
If you find yourself confused by what you’ve read to this point, don’t despair. Everything should be crystal clear by the time you finish.
IRS Refund And Tax Refund Advance
The rapid refund, that is rapidly replacing the standard paper filing, is an electronic method used for filing your tax return, and allowing you to receive your refund in about 10-14 days. Much faster than the six weeks it used to take. There are usually no excess fees attached to this type of filing, and returns may be filed for free through many local, public access facilities.
The refund anticipation loan, however, is a little different. The Tax Refund Advance must be administered by a tax professional through an established alliance with a financial and lending institution. There are several excellent choices available, and many qualified tax professionals to complete your tax return, you will however be required to pay a loan fee or a small interest fee for the opportunity to obtain an anticipation loan. There are several restrictions placed on receiving a refund anticipation loan, and some of the restrictions may affect many people.
For example, if you owe back taxes, back child support, or liens and judgments, you can’t qualify for the refund anticipation loan. Most often, the individuals who apply for and use the refund anticipation loan are recipients of earned income credit, and their refunds are usually well into the thousands of dollars. The refund anticipation loan can be processed in as little as 3 hours, and back in the hand of the tax payer by late afternoon; this is provided everything works exactly as planned. The higher interest rates charged by the bank product providers, and the higher processing fees charged by the tax preparers, equate to less money for the tax payer, but many of these individuals don’t even blink when told how much it will be to process their return, they just want the refund immediately. This is just one more example of the instant gratification upon which our society chooses to operate.
IRS Refund In Less Than 2 Weeks
Even for individuals filing with the electronic returns, and choosing to have their funds direct deposited, the turn around time is usually no more than 10 to 15 days. You would think that a turn around of less than 2 weeks would be quick enough for many taxpayers, but typically, the bigger the refund, the faster the necessary return.
It would seem to me, that this is just another way for the system to profit from the poor; as it is usually the poor that qualify for the earned income credit refunds, and these can be extremely large, especially for families with 2 or 3 dependents.
There’s no doubt that the topic of income tax refund can be fascinating. If you still have unanswered questions about income tax refund, you may find what you’re looking for in our article directory.