The wait for your tax refund to get into your bank account can be long and stressful t. However, there are faster ways to make it happen and speed up the process. First, you need to know the processes involved in a tax refund case. You need to know the things that you are doing wrong and learn the steps to correct them.
The time involved in getting your tax refund varies and depends on several factors. If you electronically filled for your tax refund, it usually speeds up your refund process through direct deposit. The internal revenue service says it can pay out tax refunds within 21 calendar days after you file for a refund.
According to statistics, nine out of ten e-filers receive their tax refunds in three weeks or less. For people who file through paperwork, they can expect to wait for a more extended period to get their refund. The IRS says it takes up to six to eight weeks to process tax refund filled through the paperwork.
Taking all these factors into consideration, if you want to get the process for your tax refund faster, you need to e-file with direct deposit. There are several online websites you can fill through for your tax refund.
After filing for your tax refund online, the next thing to do is to set up how you will receive payment. If you want to get your refund faster, you need to set up a direct deposit as eight out of ten tax refunds are received through direct deposit. Several sites serve as a 3rd party to speed up the process, once you register on one of them, all you have to do is wait for your refund to hit your account and get alerted.
Several options are available to explore if you want to get your money from the internal revenue service quickly. Once you file for your tax refund electronically, you can back it up with the following;
- Make sure you set up direct deposit
As mentioned earlier, eight out of ten taxpayers opt for e-file and set up direct deposit to quicken their refund process. If you use a direct deposit, you will get your refund between 10 to 21 days from when you file. The internal revenue service deposits into savings, checking, or retirement account. They also leave a space on the tax return form for you to fill in a request for direct deposit.
There are websites you can log on to track your direct deposit refund process.
- Set up direct depositing into multiple accounts
Another way to set up your tax refund is by having your deposits split into different accounts. It allows you to split into up to three accounts. It also doesn’t limit you to a savings or checking account as you can direct all your refund into your IRA.
Modern tax preparation software takes you through how to request for this form of payment in most tax-based websites. Alternatively, you can opt to submit the IRS Form 8888 with your tax return form; it tells the IRS that you want to split your tax refund into different accounts.
However, the accounts have to be opened in your name, your spouse name, or a joint account with both of your names. They don’t necessarily have to be opened at the same bank or financial establishment. Before you fill in these accounts, you have to be sure your bank accepts direct deposits in your type of account.
- Get a tax refund anticipation loan
Some businesses offer tax refund anticipation loans, and they are tagged as “instant refund” or “rapid refund.”They give you your money in one or two days, and they get the refund when it arrives from the IRS.
However, some fees will be charged for this speed that you are getting. The business providers charge you the fees, and they are exorbitant in some cases.
The companies have their criteria, once you tick all the boxes; you get your money before the refund arrives. While some require you use their companies to do your taxes, some others require you open your direct deposit with them.
- Invest in savings bonds
The internal revenue service introduced the savings bond purchase option in 2010. You can opt to use a portion of your refund to purchase the Series I savings bond when you file Form 8888 with your tax return. Make sure you complete part II of the form.
The limit to the number of total bonds you can purchase is $5000, with a stipulation to purchase one or more $50 bonds, as no other face values are available through the program. The great thing about I bonds is that they earn two types of interest.
They get a fixed rate, a standard rate, and a rate that’s adjusted for inflation every six months.
- Refunds by Paper check
Typically, the IRS mails you a refund check within six weeks of receiving your tax return. If you e-file, the mail takes about three weeks to arrive. To track the status of your refund check, you can visit the IRS website.
As stated earlier, a paper check is the slowest way to get your tax refund. Also, apart from the speed, there’s a chance that your check could get mixed up in the mail.
- Prepare for mistakes that might arise
When it comes to taxes, it is easy to make mistakes. It involves a lot of numbers, and it takes little to mix up the address or your bank account number.
The IRS website allows you to correct your address if you don’t receive your refund after the predicted period. They also have a number you can call, and you can also complete Form 8822 and send it via mail to the address on the form.
For Form 8888, the IRS will send you a paper check if you make a mistake. If it involves a wrong account number and the account belongs to another person, you will have to work it out with the bank as the money would have been paid in there. The IRS wouldn’t get involved as they have already paid the refund in their books.
- Refundable Tax Credits
If you earn a low or moderate income, you might qualify for the earned income tax credit (EITC). If you qualify for this refundable tax credit, you will get a refund check from the IRS even if you haven’t over paid your tax installments for the year.
Your income level and the number of children you have to affect the amount of credit you get. If you claim this tax credit or the child tax credit, it will result in your tax refund being slightly delayed. However, it’s usually worth the wait.
The PATH act requires that the IRS withhold tax refunds for this kind of claims until mid-February. The reason for this is to verify that everyone that claims these credits is indeed eligible to the claims.
- Avoid a Tax refund
When you receive the tax refunds, it seems nice and cool. However, receiving a tax refund isn’t the best. A lot of tax refunds are as a result of overpaid taxes through the year. What you do in the real sense is that you are providing the government with an interest-free loan.
You can adjust the withholdings from your paycheck by submitting a new W-4 form to your employer. It reduces the money taken from your account and will help you have more money in your bank account on paydays.
However, you have to be careful not to adjust your withholdings too much, because if too little is withheld from your paychecks; you might end up owing the IRS.
Track the progress of your refund
The IRS has helped the tracking of tax refund payments and has eradicated the element of having to guess when it will arrive. All you have to do to check the status of your refund is to visit the online portal made available by the IRS.
The tools provided help you to get updates for 24 hours regarding your e-filed tax refund complaints. You can track your money from the moment the IRS receives your complaint to when the refund is sent.
However, the best thing to do before your tax refund money arrives is to have a solid plan on how to spend the money. You can use it to sort your day to day expenses or invest the money for long term returns.
Most people incur debts before they receive the refund arrives. While it might be tempting to spend in anticipation of your refund, you have to avoid as much as you can. It is money you worked for and not free money from the government.
We know vacations, and new wear sounds appealing, but investing in self-growth is even better for you. Make sure you spend wisely!