The tax season can be stressful but there is hope at the end of the tunnel for many taxpayers in the form of a tax refund. In fact, a lot of taxpayers even rely on their yearly return, using the windfall for everything from investing to saving for retirement. We’ll tell you what you might not know if you’ve ever had major concerns about how IRS tax refund function.
What is a Tax Refund?
Refunds of taxes are typically cause for celebration. In actuality, though, they frequently imply that you overpaid your income taxes. You will receive a refund from the federal or state governments for any excess funds you paid to them. By accurately completing employee tax forms and estimating or revising deductions, you can prevent overpaying.
Why Do You Receive a Refund for Federal and State Taxes?
Taxpayers may receive refunds for a variety of reasons, or they may have unpaid balances. A W-4 form had to be completed when you were recruited if you work for an employer. You specified the amount of taxes that needed to be deducted from each paycheck on that form.
If they had too much money withheld, taxpayers get a refund at the end of the year. When you pay more in anticipated taxes than you should, self-employed people receive a tax refund. Despite the fact that you could view this additional income as free money, it actually functions more like a loan that you gave the IRS without charging interest. On the other hand, if you overestimate your tax liability, you will owe money to the government.
Refunds from Tax Credits
While most taxpayers who owing nothing lose their tax credits, you might be eligible for a IRS tax refund.
The following are the four largest tax credits that could result in you receiving a refund:
- Earned income tax credit: Low- to moderate-income taxpayers may be eligible for the Earned Income Tax Credit (EITC or EIC), which lowers the amount of taxes you owe and may entitle you to a refund.
- Child tax credits: The child tax credit returns to being $2,000 per dependent for 2022. However, the COVID-19 pandemic only caused a one-year increase in 2021, when it was higher. This is refundable up to $1,500 at a dollar-for-dollar rate.
- Premium tax credit: Households with low to moderate incomes may be eligible for a premium tax credit (PTC), which decreases the overall cost of the health insurance plans that are offered. These health insurance must be chosen from those made available through state or federal marketplaces. You might be eligible for a refund if you use less than you are allowed.
- American opportunity tax credit: Taxpayers can deduct higher education expenses paid on behalf of qualified students by using the American Opportunity Tax Credit (AOTC). Each student receives a $2,500 annual credit. The IRS will return up to 40% (up to $1,000) of the credit’s remaining balance if it results in a tax liability of zero.
Process for Tax Refund
When you send the IRS your return, the procedure starts. The process is then divided into three parts by the IRS: receipt of the return, approval of the refund, and dispatch of the refund.
- If you submit your tax return electronically, you should get an email within 24 hours confirming that it was received. Those that file paper returns will have to wait longer.
- Your refund will be approved and a tax refund date will be given once the IRS analyses your return and verifies the data. With electronic filers, this takes roughly three weeks. Taxpayers must wait at least four weeks after mailing their paper tax return.
- Your tax refund is given to you in the last step. The refund should almost instantly show up in your account for filers who include their direct deposit information. Those who fail to provide their bank information will have to wait for a paper check to be mailed to them.
Timelines for Tax Refunds: Things to consider
Your ability to manage your money and the veracity of the information you submit are just two of the many variables that may influence when you receive your tax return. If your tax refund hasn’t arrived in 21 days, there’s a good chance that there was a mistake or a problem with your return, which is why it’s being carefully evaluated.
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Your 2022 tax refund’s due date may also be impacted by the following elements:
What Kind of File you Do
If you want to receive your tax refund quickly, you must file early. Your goal should be to gather all of your tax-related paperwork by the end of January. The income details you need to file will be on forms like W-2s, 1099-Rs, 1098-Es, and 1098s.
When you file early, you put in your tax return before the deadline, which for your 2021 return is Monday, April 18, 2022. The due date for 2022 tax returns is April 15, 2023, on a Saturday. As many taxpayers submit their returns by the set time, submitting your return earlier enables you to beat the crowd.
In the same way, filing “early” refers to doing so before the October deadline if you asked for an extension. The due dates for 2021 and 2022 returns are respectively Monday, October 17, 2022 and Monday, October 16, 2023. On the other hand, taxpayers have until October to file. By doing this, you can prevent the congestion that often develops right before a deadline.
Suggested Reading: IRS Form 8995
If you’re Trying to Redeem Certain Credits
The date of your 2022 tax refund may be delayed if you claim specific credits on your tax return.
- An extra child tax credit
- Income tax credit for earned income
- Child tax credit if you submit the incorrect amount
- Compensation for an injured spouse
- If you claim an incorrect amount, use the Recovery Rebate Credit
Electronically Filed or Mailed
It’s ideal to choose electronic filing whether you complete your taxes manually, with the aid of software, or with the help of a professional tax preparer or accountant. While traditional tax returns sent by mail can take weeks to reach the IRS, e-filed tax returns are accepted by the agency within a day or two.
Existing Government Debt
Due to unpaid child support, back taxes, or student loan payments, some people owe the federal or state governments money. Taxpayers who have these problems may receive a smaller refund or none at all, and any refund may take longer than the typical 21-day window following e-filing. Your tax return won’t be reduced or delayed by Covid-19 stimulus payments.
It is great to receive a tax return, and many of you consider it as a gift. While it can be all too tempting to take a refund rather than amend your W-4 form, it may be preferable to have the appropriate amount deducted from your checks so that you don’t get a refund at all. But if your reliance on your refund becomes a yearly habit, you may want to put up a sensible financial strategy to place yourself in a better position going forward. If you have any specific query, also get in touch with the experts of live chat helpdesk.
Frequently Asked Questions
Q. How Long Does it Take the IRS in 2022 to Approve a Tax Refund?
Ans. Usually refunds are given out within 21 days or fewer of the IRS accepting your return. It might take more time, though, if there are problems with the return.
Q. Where Can I Find My IRS Tax Refund?
Ans. When you submit your taxes, you might worry about when your tax refund will appear. Fortunately, the IRS provides a feature on their website that can allay your worries.
After selecting the Where’s My Refund option, enter the amount of your return, your filing status, and either your Social Security number or your unique taxpayer identification number. Then you’ll be able to determine whether your federal tax return is on the way or whether there is a problem that has to be fixed.
Another option to monitor the status of your refund is using the IRS2Go app. If you’ve recently moved, it’s likely that your refund actually isn’t there. The IRS can send you a replacement check once you’ve updated your address online.
It can take a little longer to determine the status of your state tax refund. You’ll need to go to the Department of Revenue website for your state. Many states have their own “Where’s My Refund” tools, although in other jurisdictions you have to register in order to locate your return.
Q. What Would Happen if you Can’t Submit your Income Taxes by the Due Date?
Ans. Each year, taxpayers who are unable to submit their returns by the due date (often April 15) may request an extension from the IRS. You can electronically file a request to extend your filing deadline to October using the IRS’s Free File tool. Be aware that taxpayers who request an extension must estimate how much they owe in taxes and then send that sum to the IRS.