Get that Tax Refund the Right Way!

The majority of tax filers in the U.S. realize a tax refund due to the fact that payroll withholding tends to take out more than is necessary for income taxes. While the IRS makes sure it gets your taxes due early via this payroll process, it also means a number of folks have extra money waiting for them come tax filing time.

So the big question people tend to have is: how do I get my money? It’s fairly easy, but you need to file your income taxes to get it. The IRS is not going to proactively figure out your tax refund due, you have to do that yourself. That said, once you have your paperwork ready to go, there are couple of options available to you for getting your tax refund.

First, you can have a tax refund check mailed back to you. This takes the longest since it involves the IRS sending the paperwork over to the U.S. Treasury to have a paper check printed out and mailed to you. Sometimes the wrong address is used or your mail gets lost, so there is some risk involved as well. Most people get their mailed checks just fine, but a few every year do get delayed or lost.

Second, on your income tax forms you can request an electronic deposit. To do this right, you need to provide your bank account routing number and account number. If you don’t know what these are, they are printed on the bottom of your checkbook check. From left to right, the first set of numbers is the bank routing number. The second set is your account number. Then comes the paper check number. You only need to submit the first two sets of numbers on your tax form. Make sure they are correct or your funds could get delayed or end up in the wrong bank account. Check with your bank on what the correct data is if you’re still not sure. Then file your income taxes with the electronic option checked and the numbers included. The process typically takes about two weeks for an e-filed tax filing and about six to eight weeks if you file by mail.

Alternatively, you could invest your tax refund. This is better than just going out and spending it since it works like a savings account. The IRS offers you the option to put your tax refund into U.S. savings bonds in increments of $50. The maximum allowed is $5,000 total. Once completed, the IRS will send you the bond information.

If you need you tax refund to be sent split up to different bank accounts, you can request this treatment using IRS Form 8888 – Allocation of Refund. This can include buying U.S. Savings Bonds as well. Instead of managing the money yourself, it then gets deposited where you want it, saving you a bit of trouble.

If you find yourself getting a tax refund that is far bigger than what you request on your tax filings, that should be red flag alert. If it comes in the form of a check, don’t cash the check, hold off. There should be some kind of notice received soon after detailing why there is a difference. The IRS notice will also explain what you need to do. If you received the extra refund electronically into your bank account, you need to call the IRS for the same instructions. You will likely need to pay back the difference quickly in both cases.

If, on the other hand, your tax refund was far less than what you thought you would get, the IRS will provide you an explanation for that change as well. In many cases, the reduction is due to the seizure of some kind of federal debt that was due. Common situations include past taxes, past student loans that defaulted, or past bills owed to federal agencies. It can also include past due child support. If there is no explanation or you don’t agree with the notice, you can get further information from the IRS at 800-829-1040. Where it turns out it was debt from another federal agency, you need to contact that agency instead of the IRS.

Where your tax refund never arrived, you need to contact the IRS to get a replacement payment issued. The IRS will cancel the old check, if it is still pending, and reissue you a new payment at your correct address. More detail can be found on the IRS’ website at www.IRS.gov or by calling the agency at 800-829-1040.

Sources:

U.S. Internal Revenue Service: Where’s My Refund?

IRS Form 3911, Taxpayer Statement Regarding Refund

IRS Form 8888, Allocation of Refund (Including Savings Bond Purchases)

IRS: Tax Topic 152 – Refunds


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