Things to remember for the Tax Season

Posted by on February-10-2011 under Save Taxes

Tax season for some reason always sounds so stressful. With all the paperwork to keep track of, trying to file on time and anxiously waiting for the refund one forgets about some basic things you should know about your tax refunds. So here we are reminding you again to keep these small things in mind to reduce the stress caused by this tax season.

Tax

Getting a refund

If you are getting a refund on your tax return then your options are

Paper File

As you would have guessed it, a paper return has to be mailed in to the IRS. The refund will take a longer time to get to you. In most cases about 4-6 weeks. Then you have the option to

Get a check: if you choose this option the IRS will send you the refund as a check and it will be mailed to your address. Again this takes more time, approximately 4-6 weeks.

Or

Direct Deposit: if you choose this option, the refund amount is directly deposited in your bank account. All you need is the routing number and bank account number. But the refund time would remain the same as it is a paper return.

E-file

Electronic filing is fast, safe and secure. With e-file you can get your refund back in 8-15 days. In this case also you have the same two options:

Get a check: if you choose this option the IRS will send you the refund as a check and it will be mailed to your address. This will take about 8-15 days.

Or

Direct Deposit: if you choose this option, the refund amount is directly deposited to your bank account. All you need is the routing number and bank account number. The refund can be received as early as 8 days.

Owe money to IRS

If you owe money to the IRS you can still paper file or e-file your return. Here are the options:

Paper File

If you choose paper file you have to mail in the return to the IRS. For making payment you have the option to:

Send a check: You can mail in a check for the amount due along with your paper return.

Direct Debit: You can provide your bank account information to the IRS and they will take the amount due from the account. But for that you will also have to provide a date to the IRS. The money will be debited on the date provided by you. You would need to give your bank account information like routing number and account number along with the debit date to the IRS to take the money due.

Installment Agreement: if the amount you owe is pretty large you can set up an installment agreement with the IRS. Along with the paper return send this installment agreement. After IRS receives your installment agreement they will send you a letter confirming that you can go ahead with the payments. While filling up the installment agreement you will need to put down an amount you will be paying each month, the date of the month you will be paying on, and the amount of initial payment being sent with the tax return. With installment agreement also you have the choice to either send checks every month to the IRS or go with a direct debit.

E-file

When you electronically file a return you have 3 payment options:

Check: If you owe money you can still e-file the return. After e-filing your tax return you have to print out a voucher 1040-V. This is automatically generated by the filing website if you owe money. You have to attach the payment check with this voucher and mail it to the IRS.

Direct Debit: as mentioned above while e-filing you can provide your banking information with a due debit date and you don’t have to worry about sending in the payment after that.

Installment agreement: You can attach the installment agreement form with the e-file. Rest everything would be the same as mentioned above. You will get a letter from the IRS confirming your installment agreement. You can choose between sending them a check each month or having your account directly debited each month.

You can also pay the money you owe over the internet or by phone. All these methods are safe and secure. The payment website that IRS provides is EFTPS. With EFTPS you can also schedule payments for future dates and not worry about remembering each month to pay the IRS. You can also schedule dates for estimated payments, in case you think you will be owing money next year and avoid the underpayment penalty.

The most important thing to remember with owing money is that if you file an extension for your return. The extension only gives you extra time to file your return; it’s NOT an extension to pay the money you owe. If you do not pay the money you owe by the due date (April 18th this year) you will start incurring penalties and interest on the amount you owe. By the time you come around to file your return the amount you owe would have gone up due to these penalties.




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