Tax season is heating up. If you have put off filing your return, consider this a reminder that it’s time to get moving — the April 15 deadline is about seven weeks away.
If you hope to get a tax refund this year — or even if you simply hope to increase your check from the IRS next year — here are five things you must know:
1. Choosing direct deposit speeds your refund
Way back in the mists of time — like, maybe a decade or so ago — you probably signed your return, stuffed it into an envelope and dropped it in the nearest mailbox.
How quaint that seems now. If you are among the holdouts still relying on snail mail to file your return, it’s time to get in step with the 21st century and file electronically.
If you have yet to choose software for that task, check out “The 5 Best Tax Software Programs for 2019” for help finding the best one for you.
Not only will you save time by filing electronically, but you’ll also be less likely to make a mistake — something that could delay your refund. According to the IRS, the error rate for paper tax returns is 21 percent, compared with 0.5 percent for electronically filed returns.
How you opt to receive your refund can also impact how quickly you receive the money. Rather than waiting for a check to arrive via the U.S. Postal Service, have the IRS deliver your refund right into your bank account via direct deposit.
According to the agency:
“Combining direct deposit with IRS e-File is the fastest way to receive your refund.”
If you like, the IRS can even divvy up your refund and deposit it in up to three separate accounts.
2. Filing early keeps crooks off your refund
We’re just entering prime tax time. If you file your return today, you will still file on the early side compared with millions of other taxpayers.
And that’s a good thing, because filing early helps to keep criminals from exploiting your tax information for their own gain. As we explain in “Tax Hacks 2019: Avoid These Tax Scams,” clever thieves who get access to your personal information can then turn around and file a tax return in your name:
“They use your name, address, Social Security number and other personal data to fill out and file a fake tax return in your name. Then they get a big refund. Meanwhile, the IRS rejects your actual return because the agency thinks you already filed.”
The earlier you file, the less time crooks have to pull off such a scheme.
3. You can instantly check the status of your refund
Upon filing your return, you likely will be counting the days until the big refund shows up. If you get anxious and wonder when that windfall will arrive, stop by the IRS website and use the agency’s Where’s My Refund? tool.
To find out about your tax return and refund status, you will need:
- Your Social Security number
- Your filing status
- The exact whole-dollar amount of your refund
The tool updates daily, usually overnight.
You can also check your refund status from your smartphone by using the free IRS2Go app.
4. Your refund might be a little smaller — or maybe not
Unless you’ve been on another planet, you’ve probably heard that many taxpayers are receiving smaller refunds than they expected. This is largely due to changes in the tax code resulting from 2017’s Tax Cuts and Jobs Act.
People who didn’t adjust their withholding last year likely saw more money in their paychecks throughout 2018. But doing so also means a smaller refund — or even the possibility of owing money to Uncle Sam — this tax season.
This will come as no surprise to Money Talks News readers, of course. We warned about this possibility last year in “Millions of Households Might Face a Costly Surprise at Tax Time.”
Now, as it turns out, a Morgan Stanley analysis released this week shows that tax refunds have been rising as tax season has progressed, and now are ahead of last year’s pace, CNBC reports.
But if you are getting a smaller return than expected — or a bigger refund than desired — pay attention to the next point on our list.
5. It might be time to adjust your withholding
If you were disappointed by this year’s tax refund — or even worse, if you found that you owed money — you can avoid a similar fate next year by adjusting your withholding now.
Having more money taken out of your paycheck for taxes throughout the year will mean you are less likely to owe money to Uncle Sam at tax time, and more likely to get a refund.
Of course, getting a refund is not necessarily a good thing. As we have pointed out several times before in stories like “8 Foolish and Costly Financial Fouls — and How to Avoid Them,” doing so is like giving an interest-free loan to the government.
That is another reason why adjusting your withholding right now can make a lot of sense.
Our suggestion is to start by gathering your pay stubs. Then, head over to the IRS withholding calculator to find out if you are having the right amount of tax withheld from each paycheck. If not, fill out a new Form W-4 and give it to your employer.
Do you expect a tax return this year? Share your hopes — or fears — by commenting below or on our Facebook page.