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Debunking Federal Tax Refund Myths
If you’ve already filed and are wondering where your refund is, the internet will give you a plethora of answers on where it might be in the IRS’ processing queue, most of which are not true.
Here’s a breakdown of the refund myths and the IRS facts to debunk them.
Myth: Calling the IRS, a tax software provider or a tax professional will provide a more accurate refund date.
Fact: The best way to check the status of a refund is through the Where's My Refund? tool or the IRS2Go app.
Taxpayers can also call the automated refund hotline at 800-829-1954 to get their refund status. This hotline has the same information about current tax year refunds as Where's My Refund? There is no need to call the IRS unless Where's My Refund? says to do so.
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Myth: The Where's My Refund? tool must be wrong if it hasn’t updated yet.
Fact: Where’s My Refund has the most current information about refund status. It is updated once a day, usually overnight. Even though the IRS issues most refunds within 21 days, it's possible a refund may take longer. If the IRS needs more information to process a tax return, the agency will contact the taxpayer by mail.
Taxpayers should also consider the time it takes for banks to post the refund to the taxpayer's account. People waiting for a refund in the mail should allow extra time.
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Myth: The Where's My Refund? tool must be wrong because the refund amount is less than expected.
Fact: There are several factors that could cause a tax refund to be less than expected. The IRS will mail the taxpayer a letter of explanation if it adjusts a refund.
Some taxpayers may also receive a letter from the Department of Treasury's Bureau of the Fiscal Service if their refund was reduced to offset certain financial obligations.
Before calling, taxpayers should wait for the letter to understand why the change occurred.
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Myth: Getting a refund this year means there's no need to adjust withholding for tax year 2024.
Fact: To avoid a surprise next year, taxpayers should make changes now to their tax withholding. The Tax Withholding Estimator tool can help taxpayers determine if their employer is withholding the right amount. Taxpayers can use the results from the Tax Withholding Estimator to complete a new Form W-4, Employee's Withholding Certificate and submit it to their employer as soon as possible.
Withholding takes place throughout the year, so it's better to take this step as soon as possible.
Avoid Tax Return Mistakes, Reduce Processing Delays & Refund Adjustments
The Internal Revenue Service issued a reminder to taxpayers this week on ways to prevent typical errors on their federal tax returns to help speed potential refunds.
Collect all tax-related paperwork
Taxpayers should collect all key documents, including Forms W-2 and 1099, as well as any supporting paperwork for tax deductions or credits such as educational credits or mortgage interest payments. Additionally, having the previous year's tax return accessible is advisable as it may be required.
Note: For returning clients, if you’d like to our firm to send you a PDF of your 2022 income items, Sch A deductions, etc, please send an email to “info@AmataAccountingFirm.com” with the subject line “2022 tax return items for reference” and our admin team will upload this PDF to your client portal.
Use electronic filing
The IRS advises taxpayers and their tax advisors use electronic filing methods. Electronic filing minimizes mathematical errors and identifies potential tax credits or deductions for which the taxpayer qualifies.
It's essential for taxpayers to carefully review their tax returns to ensure accuracy. Opting for electronic filing and selecting direct deposit is the fastest and safest way to receive a refund.
Note: On this year’s client tax organizer, there is a screen wherein you can securely input your direct deposit information.
Ensure filing status is correct
Tax software serves to prevent errors in selecting a tax return filing status. For taxpayers unsure of their filing status, the Interactive Tax Assistant on IRS.gov can assist in choosing the correct status, particularly when multiple statuses might apply.
Make sure names, birthdates and Social Security numbers are correct.
Taxpayers must accurately provide the name, date of birth and Social Security number for each dependent listed on their individual income tax return. The SSN and individual's name should be entered precisely as indicated on the Social Security card.
In cases where a dependent or spouse lacks a SSN and is ineligible to obtain one, an assigned Individual Tax Identification Number (ITIN) should be listed instead of an SSN.
Answer the digital assets question
Everyone who files Forms 1040, 1040-SR, 1040-NR, 1041, 1065, 1120 and 1120S must check one box answering either "Yes" or "No" to the digital asset question. The question must be answered by all taxpayers, not just by those who engaged in a transaction involving digital assets in 2023. Taxpayers must report all income related to digital asset transactions.
See IRS.gov Digital Assets | Internal Revenue Service for details on when to check “yes” and how to report the income.
Report all taxable income
Keep in mind that most income is subject to taxation. Failing to accurately report income may result in accrued interest and penalties. This includes various sources of income such as interest earnings, unemployment benefits and income derived from the service industry, gig economy and digital assets.
For further details, consult Publication 525, Taxable and Nontaxable Income
.
Make sure banking routing and account numbers are correct
Taxpayers have the option to request direct deposit of a federal refund into one, two or even three accounts. Provide correct banking information: If expecting a refund, ensure the routing and account numbers provided for direct deposit are accurate to avoid delays or misdirected refunds.
Remember to sign and date the return
When submitting a joint return, it is required for both spouses to sign and date the return. If taxpayers are preparing their taxes independently and filing electronically, they need to sign and authenticate their electronic tax return by inputting their adjusted gross income (AGI) from the prior year. Taxpayers can refer to "Validating Your Electronically Filed Tax Return" for guidance if they have any inquiries.
Ensure address is correct if mailing paper returns
Taxpayers and tax professionals are urged to choose electronic filing whenever possible. However, for those who must submit a paper tax return, it's essential to verify the accurate mailing address either on IRS.gov or in the instructions provided with Form 1040 to prevent processing delays.
Keep a copy of the tax return
Upon readiness to file, taxpayers should create duplicates of their signed return and any accompanying schedules for their personal records. Maintaining copies can help them prepare future tax returns and figure mathematical computations in the event of filing an amended return. Typically, taxpayers should retain records supporting income, deductions or credits claimed on their tax return until the period of limitations for that specific tax return expires.
Request an extension, if needed
Taxpayers requiring more time to file their taxes can easily request a six-month extension until October 15, thereby avoiding late filing penalties. This extension can be requested either through IRS Free File or by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by April 15.
It's important to note that while an extension provides extra time for filing, tax payments are still due on April 15 for most taxpayers.
Alternatively, taxpayers can seek an extension by making a full or partial payment of their estimated income tax and indicating that the payment is for an extension. This can be done using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a debit/credit card or digital wallet. By doing so, taxpayers avoid the necessity of filing a separate extension form and receive a confirmation number for their records.
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