Getting ready for taxes: What to know

Getting ready for taxes: What to know

WASHINGTON, D.C. (KFVS) - Tax season is approaching and the Internal Revenue Serice (IRS) cautions taxpayers to not rely on receiving their refund at a certain time. Especially when purchasing pricey items or paying bills.

There are many factors that can affect the time in which you receive your refund. While most people will receive their refunds within 21 days, errors, incomplete sections, fraud and identity theft are some issues that will force a refund to be under further review.

By law, the IRS cannot issue refunds to people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund, including the portion not associated with the credits. This helps ensure taxpayers receive the refund they’re due by giving the IRS more time to detect and prevent fraud.

Taxpayers can use Where’s My Refund? to check their refund status within 24 hours after the IRS has electronically received it or four weeks by mail. It will provide a personalized date the taxpayer can expect their refund. Mail time should also be considered in the wait.

Other things like year-end bonuses, holiday pay and temporary jobs may also affect your refund. Theses are some late in the year transactions that can impact your taxes. Stock dividends, capital gains distributions from mutual funds, stocks, bonds, virtual currency, real estate or other property sold a profit are also on that list.

Taxes must be paid as income is earned or received during the year, either through withholding or estimated tax payments. If the amount of tax withheld from salaries or pensions is not enough, the taxpayer may have to make estimated tax payments.

If the taxpayers’ withholding unexpectedly falls short of the tax liability for the year, they can still make a quarterly estimated tax payment directly to the IRS. The deadline for making a payment for the fourth quarter of 2019 is Jan. 15, 2020.

The Tax Withholding Estimator, available on IRS.gov. It is a tool that can help taxpayers make sure they have the right amount of tax withheld from their pay.

Form 1040-ES are also a good tool for figuring the right amount to pay. This form also includes key tax changes and the federal income tax rate schedules for 2019.

A companion publication, Publication 505, Tax Withholding and Estimated Tax, has additional details including worksheets and examples that can be especially helpful to those who have dividends or capital gain income, owe alternative minimum tax or have other special situations.

The fastest and easiest way to make an estimated tax payment is to do so electronically using IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS) or IRS.gov/payments.

By law, the Department of Treasury’s Bureau of the Fiscal Service (BFS) issues IRS tax refunds and conducts the Treasury Offset Program (TOP) This may reduce a taxpayer’s refund and offset all of part of the refund. This is done to pay past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or other federal nontax debts, such as student loans.

Changes to the tax return by the IRS may also reduce the tax refund. Where’s My Refund? will also reflect the reasons for the refund offset when it relates to a change in the tax return. IRS.gov has more information about refund offsets.

A majority of taxpayers get the refunds faster by filing electronically and using direct deposit. This is the same electronic transfer system that is used in 98 percent of Social Security and Veterans Affairs benefits.

Taxpayers should let their tax preparers know what method they want to use.

Direct deposit should only be deposited into accounts that are in the taxpayer’s name. No more than three electronic checks can be deposited into the same account.

Taxpayers who exceed the limit will receive an IRS notice and will be mailed a paper refund check. Whether a taxpayer files electronically or on paper, direct deposit gives them access to their refund faster than a paper check.

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