If you are expecting an income taxrefund like millions of US taxpayers, read on. The good news is, you will have extra money. The bad news? It will be tough figuring out how to use it.
If you still don’t know how to make the most out of the extra income that’s about to come your way, here are some helpful ideas from financial experts.
Pay off your credit cards, your 401(k), or your mortgage. Paying off the amount you still owe on plastic maybe the wisest thing to do. Credit card interest rates are at an all-time high, so free yourself from crippling balances by wiping them out. Remember that paying just the minimum payment is never a good idea. Your money just goes into servicing the interest, and does not really reduce the principal.
But if your credit card is in good shape, why not make a lump sum payment to the principal on your mortgage? Doing so can save you a lot of money in the long run. Think about it: if you pay $1,000 to your principal on a $100,000-mortgage (assuming your rates are at 7 percent), you would save at least $4,000 over the loan term.
You can also use the money to add to the balance in your 401(k), and then use the money you would have used to pay the loan as additional tax-deferred premiums instead. This is not only sensible, but also very wise. This way, you put the money you have borrowed back into your account and let it earn interest, and make extra contributions to build up your account.
Establish a savings account for emergencies. You could lose your job anytime, so don’t dilly-dally; put aside your tax refund for an emergency account and be prepared for such a situation. An emergency fund should allow you to get by for at least three months if you ever lose your job. Use your tax rebate to beef up your existing emergency fund, or to start one if you haven’t yet.
The easiest way to check on your refund is to ask the IRS through IRS.gov. On the home page of the site, you will see a "Where's My Refund?" link. Using the service is fairly easy. You will need a copy of your Tax Returns to provide the necessary information to get the status of your refund.
Specifically, you need to provide your social security number, you tax filing status and the exact amount of your refund. The reason the IRS requires all of this information is purely for security purposes, to wit, the agency wants to make sure it is giving access only to the taxpayer. Again, all of this information should be on your return. If it is not, something is very wrong!
Once you submit the required information, the IRS will provide online results typically showing:
1. That the return was received and is in processing;
2. The expected mailing date or direct deposit date of your refund; or
3. Whether your refund could not be issued because of a delivery problem.
In some cases, the results may alert you to the fact that the IRS is reviewing your tax return because of errors or questionable entries. In such a case, it is highly advised that you review your return with a qualified tax professional and make absolutely sure that the return will stand up to scrutiny.
How Long Do You Have To Wait Before Checking?
If you filed your taxreturn electronically, you should be able to access the status of your refund within 48 to 72 hours. Since the return is coming into the database electronically, it should be assimilated into the system fairly quickly. If you do not file your return electronically, you are going to have to wait three weeks or more before the status of your return can be checked. As you can imagine, the IRS is receiving an enormous amount of paper tax returns and it takes time to organize and enter the returns into the system.
How Long Should It Take To Receive Your Tax Refund?
If you are expecting a refund, the time to issue the refund will depend upon how you filed your return. If you filed a paper return via regular mail, you refund should be issued in six to eight weeks from the date it was received by the IRS. Alternatively, if you filed your return electronically, you should expect to receive your refund in three to four weeks. If you elected to have your refund directly deposited in your banking account, you should take one week off of the above estimates.
EITC For Individuals for Maximize Tax Refund
If you’re like millions of Americans, you work hard but you don’t earn a high income, and want to keep more of what you earn. The Earned Income Tax Credit (EITC) is a credit for people who earn low-to-moderate incomes. EITC can reduce your taxes, and can mean a refund. In simple terms, working families and individuals may keep more of what they work for.
Will you qualify for EITC this year?
Find out if you are eligible for the Earned Income Tax Credit (EITC) by answering some questions and providing basic income information using the EITC Assistant. Available in English and Spanish.
You must meet the following EITC requirements:
• Must have a valid Social Security Number
• You must have earned income from employment or from self-employment.
• Your filing status cannot be married, filing separately.
• You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
• You cannot be a qualifying child of another person.
• If you do not have a qualifying child, you must:
- be age 25 but under 65 at the end of the year,
- live in the United States for more than half the year, and
- not qualify as a dependent of another person
• Cannot file Form 2555 or 2555-EZ (related to foreign earn income)
• EITC Thresholds and Tax Law Updates
• Special rules may apply
source :- irs.gov
