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Why Do We Get Tax Refunds

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Who Can Get A Refund For Fica Overpayment

Why are Tax Refunds Taking So Long? The Ugly Truth About the IRS

If you overpay your FICA taxes, you are entitled to a refund of the excess amount.

You might overpay if:

  • You aren’t subject to these taxes, but they were withheld from your pay.
  • You didn’t owe FICA taxes, but you made estimated tax payments.
  • You calculated your estimated payments incorrectly.
  • Your total income from two different employers is over the wage base, but both employers withheld FICA taxes.

While the percentages withheld for FICA tax might sound small, they can amount to a large payment. For example, if you are refunded 7.65% of a $50,000 salary, you will get $3,825 back.

If you have overpaid for any reason, you can submit a request to have those taxes refunded. You must first attempt to claim a Social Security tax refund from your employer. If you can’t get a full refund from your employer, you can submit your refund claim to the Internal Revenue Service on Form 843.

How To Find Out If You Will Owe The Irs

If you’re not sure whether you will owe the IRS at the end of the year or get money back, there’s a pretty simple way to find out, according to Anjali Jariwala, a certified financial planner, CPA and founder of FIT Advisors in Torrance, California.

The IRS has a calculator where taxpayers can input their filing information, including how much they’ve worked, what they expect to earn, what deductions they might be eligible for and credits they could receive.

The calculator then estimates if you’re likely to get a refund or will owe the IRS.

“It is especially helpful to run your numbers if you receive large bonuses or other income streams that may not have been expected,” Jariwala said.

Throughout the year, people should also check their paychecks to make sure their employer is correctly withholding a portion of their income for taxes, said Fontes of University of Chicago.

In addition, taxpayers should hold onto any documentation about income such as 1099s, pay stubs and any other forms to prove what you’ve earned. Comparing that information to a previous tax return can also help people assess if they might get a refund or owe the IRS, Fontes said.

Of course, for those with more complex tax returns, Jariwala and Fontes recommend seeking professional help to make sure you’re paying your taxes correctly.

“If you’re a business owner, 1099 or have other tax complexity, then you should really use a CPA and have them run projections throughout the year,” Jariwala said.

What Are Tax Returns What Are Tax Refunds

Many consumers confuse and conflate the terms tax return and tax refund. A tax return is a form, or series of forms, that compose a statement of your income, expenses, liability, and taxes youve already paid to the IRS throughout the year. If you are a salaried or hourly employee, youve no doubt noticed that your employer withholds a percentage of your pay every period for taxes. When you file your tax return, you send the IRS a statement of how much money youve already paid in taxes for salaried or hourly employees, you will most likely use Form 1040 to file your federal return.On the other hand, a tax refund is the difference between what you actually owed in taxes and what you paid. Most Americans pay more than they truly owe in taxes through their employer. This is because, when an employer withholds pay, the tax money is usually divided between Social Security, Medicare, and also state income tax . When you receive a tax refund, the money is the difference between what you owed in federal tax and what you actually paid in taxes . To learn more about income tax and how it is calculated, check out this video:

Read Also: How To File 2 Different State Taxes

Surprise Refunds Will Keep Coming In Groups

“The IRS plans to issue the next set of refunds in mid-June,” the agency said on June 4 when it announced the first group. There’s been no further word since then meaning that, barring any glitches, more taxpayers are in for refund surprises this week, during what still might be considered mid-June.

The distribution of refunds will continue throughout the summer, the tax agency says.

If you qualify for money back, youll receive the refund as a direct deposit or if the government doesn’t have your banking information a paper check. The funds also may be applied to any taxes or other federal debts you owe. The IRS is automatically issuing the refunds, so theres nothing you need to do to get yours.

The deadline to file your 2020 taxes was extended until May 17. If you missed the deadline, you should file your taxes now and remember that unemployment benefits of up to $10,200 from last year are exempt from taxes. That could reduce your tax liability significantly.

Keep in mind that even though the IRS has waived some federal taxes on your jobless benefits, your state may charge income tax on all unemployment payments you received.

How To Decrease Your Tax Refund

How to Deposit Your Tax Refund Fast

If you are employed its possible to get your employer to decrease the amount of tax collected from each pay cheque by filling out a Form TD1.

  • You need more cash flow throughout the year to live on

  • You want to invest your money throughout the year in a high-interest saving account

  • Lets say you simply need more cash month to monthyou have a high rent, debts to pay or have your kid in daycare. You know you are going to contribute and deduct a large amount to your RRSP and therefore will end up with a lower income, less taxes payable and a large refund. The government doesnt know this in advance though, its collecting the tax based on your gross salary alone, without taking into account any deductions or credits. If you reduce the amount taken off each pay cheque you could end up with a few hundred dollars each month to make it easier to pay your living expenses.

    Or, lets say you are a high earner and pay over a $100,000 in taxes each year. You know that if you squirreled away that amount in a high interest savings account every month until April 30 of the following year, instead of handing it over preemptively to the government, you could earn at least 2.4% interest on that money. This strategy takes discipline not to spend, what is essentially, the Crowns money.

    Recommended Reading: Can Medical Expenses Be Deducted From Taxes

    How To Call The Irs If You’re Waiting On A Refund

    It’s best to locate your tax transcript or try to track your refund using the Where’s My Refund tool . The IRS says that you can expect a delay if you mailed a paper tax return or had to respond to the IRS about your electronically filed tax return. The IRS makes it clear not to file a second return.

    The IRS says not to call the agency because it has limited live assistance. The agency is juggling the tax return backlog, delayed stimulus checks and child tax credit payments. Even though the chances of speaking with someone are slim, you can still try. Here’s the best number to call: 1-800-829-1040.

    I See An Irs Treas 310 Transaction On My Bank Statement What Is It

    If you receive your tax refund by direct deposit, you may see IRS TREAS 310 listed for the transaction. The 310 code simply identifies the transaction as a refund from a filed tax return in the form of an electronic payment . This would also apply to those receiving an automatic adjustment on their tax return or a refund due to March legislation on tax-free unemployment benefits. You may also see TAX REF in the description field for a refund.

    If you received IRS TREAS 310 combined with a CHILD CTC description, that means the money is for a monthly advance payment for the enhanced child tax credit.

    If you see a 449 instead of 310, it means your refund has been offset for delinquent debt.

    Recommended Reading: What Age Do You Have To File Taxes

    Request Electronic Communications From The Department

    The best way to communicate with the Tax Department about your return is to open an Online Services account and request electronic communications for both Bills and Related Notices and Other Notifications. To ensure that you receive future communications in the Message Center of your Online Services Account Summary homepage, create your account now, before filing your next return.

    Why Arent The Irs Folks Telling Us Who Gets Refunds

    Tax Refund 2021: When it will come Why is it late (NEW INFORMATION)

    They technically are. According to the IRS, taxpayers whose returns are corrected will receive a notice. However, the notice is coming separately and could take up to 30 days. That said, the agencys messaging hasnt been stellar here. It initially said the payments would start going out in May, but didnt provide an exact date, and so many taxpayers who were anticipating a refund waited weeks for updated information.

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    Double Check Your Tax Return Before You File

    Double checking your tax return prior to submission can ensure your tax refund is processed quickly. Failure to do so may cause the IRS to delay the processing of your tax refund.

    Here is a list of questions to review prior to filing your tax return to ensure the IRS processes your tax refund as quickly as possible.

    • Did I review my identifying numbers for myself, spouse and dependents?
    • Did I ensure the names on my tax return are spelled correctly?
    • Did I review my dependents information?
    • Have I reviewed my banks routing and account numbers for accuracy?
    • Did I include the correct date of birth for myself and dependents
    • Did I electronically sign my tax return ?

    Also Check: Can I File Taxes If My Parents Claim Me

    Why Would My Tax Refund Come In The Mail

    There are a couple of reasons that your refund would be mailed to you. Your money can only be electronically deposited into a bank account with your name, your spouse’s name or a joint account. If that’s not the reason, you may be getting multiple refund checks, and the IRS can only direct deposit up to three refunds to one account. Additional refunds must be mailed. Also, your bank may reject the deposit and this would be the IRS’ next best way to refund your money quickly.

    It’s also important to note that for refunds, direct deposit isn’t always automatic. Some are noticing that like the stimulus checks, the first few payments for the child tax credit were mailed. Just in case, parents should sign in to the IRS portal to check that the agency has their correct banking information. If not, parents can add it for the next payment.

    For more information about your money, here’s the latest on federal unemployment benefits and how the child tax credit could affect your taxes in 2022.

    What Are These Refund Checks For

    How to Get the Student Loan Interest Deduction

    The American Rescue Plan Act authorized changes to the law that excluded up to $10,200 in unemployment compensation for 2020. The law didnt take effect until March 11, so some Americans who filed taxes early have now overpaid. For the most part, the IRS has said it will automatically correct those tax returns and issue refunds accordingly.

    Read Also: How To File Pa State Taxes

    When We Issue A Refund We Will Deliver One Of The Following Messages

    • Your return has been processed. A direct deposit of your refund is scheduled to be issued on . If your refund is not credited to your account within 15 days of this date, check with your bank to find out if it has been received. If its been more than 15 days since your direct deposit issue date and you havent received it yet, see Direct deposit troubleshooting tips.
    • Your refund check is scheduled to be mailed on . If you have not received your refund within 30 days of this date, call 518-457-5149.

    We Have Received Your Return And It Is Being Processed No Further Information Is Available At This Time

    This is a general processing status. Unless your return is selected for additional review, or we request additional information, this will be your status throughout processing until we schedule an issue date and update your status at that time. While your return is in this stage, our Call Center representatives have no further information available to assist you. As your refund status changes, this message will automatically update in our automated phone system, our online Check your refund status application, and in the account information available to our representatives.

    Recommended Reading: When Is Nys Accepting Tax Returns 2021

    How To Check Your Refund Status

    Use the Where’s My Refund tool or the IRS2Go mobile app to check your refund online. This is the fastest and easiest way to track your refund. The systems are updated once every 24 hours.

    You can to check on the status of your refund. However, IRS live phone assistance is extremely limited at this time. Wait times to speak with a representative can be long. But you can avoid the wait by using the automated phone system. Follow the message prompts when you call.

    Handling A Refund Delay Do Your Research And Respond Right Away

    No Tax Refund After 21 days? Reasons Why and Tips on Contacting the IRS

    If the IRS is delaying your refund, youll need to understand why, and navigate the IRS to issue your refund as quickly as possible. This can be a daunting task because refund holds can feel like audits. But, be patient, and dont worry. If your tax return is correct, its just a matter of explaining everything to the IRS.

    Best course: If you get a notice from the IRS about your refund hold, immediately investigate the cause. Heres where to start.

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    How To Track Your Federal Tax Refund If It Hasn’t Arrived Yet

    If you just filed recently, you should know your federal tax refund check could take up to 120 days to arrive. Here’s what else we found.

    If you see “IRS TREAS 310” on your bank statement, it could be your income tax refund.

    Whether you’ve already filed your taxes or you’re planning to do so by the final due date — that’s Oct. 15 if you file a tax extension — you’ll need to know how to track your refund. Be aware that the IRS is still facing a backlog of unprocessed individual returns, 2020 returns with errors and amended returns that require corrections or special handling. And while refunds typically take around 21 days to process, the IRS says delays could be up to 120 days.

    The tax agency is also juggling stimulus checks, child tax credit payment problems and refunds for tax overpayment on unemployment benefits. The money could give families some financial relief but an overdue tax refund could also be a big help. If you don’t file your 2020 tax return soon, you’ll likely owe late fees or more interest — and you could be missing out on your tax refund, stimulus checks or child tax credit payments, which you may only be eligible for with your 2020 tax return.

    Undelivered Federal Tax Refund Checks

    Refund checks are mailed to your last known address. If you move without notifying the IRS or the U.S. Postal Service , your refund check may be returned to the IRS.

    If you were expecting a federal tax refund and did not receive it, check the IRS’Wheres My Refund page. You’ll need to enter your Social Security number, filing status, and the exact whole dollar amount of your refund. You may be prompted to change your address online.

    You can also to check on the status of your refund. Wait times to speak with a representative can be long. But, you can avoid waiting by using the automated phone system. Follow the message prompts when you call.

    If you move, submit a Change of Address – Form 8822 to the IRS you should also submit a Change of Address to the USPS.

    Recommended Reading: How To Find Tax Amount

    How Can I Get My Refund

    If you are owed a tax refund, the IRS default is to send you a paper check by mail. The IRS claims to begin processing all e-filed returns within 24 hours of being submitted and all paper returns within 21 calendar days. If you have filed your taxes online or throughtax software, you may also request to receive your refund via direct deposit.Its possible that you will not be eligible to receive a tax refund. If you have not overpaid in taxes, you cant expect to be refunded. In some cases, if you have underpaid, you may owe money to the IRS instead of getting a refund. If youd like to check on the status of your refund, you can do so via the IRSsofficial website here. Some things that can speed up your refunds arrival include:

    • Paying early. The sooner you file your tax return, the sooner the IRS can process your data and calculate your return. If you wait until the last minute to file, you can expect a longer delay while waiting for your refund.
    • Double-checking your math and data. If your tax return has an error on it, you will likely be contacted for a correction before your refund is issued. Double-checking the info youve submitted can help you get your refund faster.

    Some of the things that can delay the arrival of your refund include:

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