This time of year taxes are on the forefront of most Americans personal finances. When can I file, how do I file, how much will I get back and why is the IRS taking so long to pay me my refund are just examples of the most googled tax questions and comments I see. Over the years and in preparation for the current tax season I have already answered several of these types of questions. So without further ado here are the answers you were looking for and links to articles with all the details you need. If you have other burning questions please leave a comment and I’ll try my best to get an answer for you.
1. When are my taxes due and when can I file them?
The start and end of the tax season are the key dates most people care about, but you should be aware of several other key tax filing dates and deadlines that may apply to you if you have foreign accounts, a business owner or are filing late.
2. How can I file my taxes for Free?
When it comes to filing your taxes, there are a lot of free options that allow eligible tax payers to avoid expensive filing fees. A number of leading tax software providers provide free e-filing options via the IRS’ free file program. You can use free e-Filing (online tax software filing) if your adjusted gross income (AGI) is $71,000 or less. Most tax software provides guidance through the filing process via asking simple questions and putting your answers on the right forms. If does all the math and checks for accuracy, which makes it a better option than filing manually via paper forms.
3. Can I file a Tax Extension? How?
Inside your head, you scream, “I need more time to file my taxes!” But before you stress out realize that the IRS offers a 6-month tax filing deadline extension that is not that hard to get. In fact over 12 million Americans (covering 8% of all returns) request an extension every year. It’s always a better strategy to prepare and file a tax return or request a tax extension even if you can’t pay your entire tax bill. The penalties for doing nothing are far higher. To file for a tax extension you can go the IRS website and request it directly there. Or most online tax software providers can also file the extension on your behalf.
4. How much do I need to make to file taxes?
While there are several factors (residency status, claiming tax credits) that drive if you have to file taxes or not, how much you earn (gross income) is a primary driver. The minimum income requirements (based on filing status) change every year – see this table for the latest thresholds. Note that the minimum income thresholds for requiring a tax filing for those who are self-employed (e.g freelancers or S-corp owners) is $400.
Even if appears you don’t have to file it may be worth seeing what your return would look like. After all it’s free to check what your return would look like via most tax software providers – you only pay on submission. Who knows you may qualify for a refund like 70% of Americans do – especially if your income is on the lower end for the past tax year.
5. When will I get my tax refund?
You’ve filed your tax return and are expecting a tax refund. Congratulations! Now, you want to know when to expect your refund. Once your return is accepted by the IRS, they will processes your eligible refund based on the estimated IRS E-file Refund Cycle Chart. Depending on passing various checks for the accuracy of your return and identity, the IRS says that you should receive your federal refund between 8 and 14 days after they accept your return. Their published SLA is 21 days however and they ask you wait at least this many days before calling them about your return or refund.
6. Why is it taking so long to get my refund?
Despite IRS statistics that say 90% of tax payers get their refund within 21 days – many taxpayers end up waiting much longer to receive their refund. Part of this is due to the fact that people file early and the IRS only starts processing returns towards the end of January. Of late though there has also been a lot of fraudulent claims which means longer return processing and refund payment times as additional identity verification checks are put in place.
This will be exacerbated this year under the PATH act which requires the IRS to hold all refunds for returns with EITC/ACTC claims till mid-February. You should keep checking your refund status via the IRS WMR (Where is my Refund) tool and call them if its been 21 days since your return was accepted.
7. What happens if I get audited by the IRS?
Most tax payers, including myself, share the same dread of getting audited by the IRS, but in reality the chances of facing an IRS audit aren’t all that high. In recent tax years the IRS audits 1% of the more than 140 million returns filed annually. Generally the more money you make the more likely you will be audited because it is more cost-effective for the IRS. However they are various types of IRS audits – from correspondence to in-person – depending on the severity of the issue and red flags raised when your return is systematically checked.
If the IRS sends you a request for more information never ignore the letter and answer it before the due date. The IRS won’t go away so don’t wait for a repeat notice. If you had taxes prepared by a firm or accountant, sit down and talk to them and have them forward the requested information to the IRS. If you did them yourself, make sure you provide the necessary information. A lot of tax software gives you the options of purchasing some kind of audit protection so take advantage of that if possible. For in-person IRS audits consider hiring a professional like a CPA or a tax attorney to go with you. To prepare for any type of IRS audit make sure you also hang on to your tax documents (on an electronic copy) for at least 7 years.