Tax refunds filed early can mean money now
Tax time coming soon
One of the easiest ways to find money now is to get a jump on filing income taxes. Many consumers wait until April to start gathering their paperwork together. They bring them to their tax preparer and want a rush job. The problem with waiting is that it opens the door for mistakes and it makes the time to get a refund that much longer. For anyone looking to get a jump on filing, here are some tips.
Getting ahead on taxes
The first thing taxpayers need to be aware of is Schedule M. Schedule M is a new tax document that is used to account for the “Making Work Pay” credit money received on paychecks. New payroll tables used last year created an extra $400 for single workers and $800 for married couples filing jointly. For some taxpayers, however, they may have paid too much into the fund. To correct the over-taxation, consumers have to file a Schedule M.
Secondly, it’s time to organize paperwork. January to mid-February is when W-2s and other tax-related documents start coming in. Consumers should create a special place for all tax documents. The needed information on these documents and having them in one place will make it all that much easier to fill out tax paperwork.
Thirdly, consumers need to double-check social security numbers. Though it sounds rudimentary, there are a surprising number of tax returns received without the correct numbers. It holds up processing and refunds for thousands of filers. Having the right number is critical because these numbers have so many transactions keyed directly to them. Everything from income statements to retirement plan contributions are recorded based on the social security number.
Fourthly, consumers need to make sure they receive the right filing package. The IRS package received is based on a taxpayers filing history, but that can change. Most documents can be retrieved online or at the post office or library. For taxpayers who had a major change, like marriage, it’s important to find the right documentation. Married couples looking for money now have to file with the right documents and in the right way.
Fifthly, consider filing electronically. Studies have shown that last year about two-thirds of all taxpayers filed electronically. According to the IRS, E-filed tax returns are processed in about 50% less time than paper ones. In addition, most software has a review portion of the program where entries are double checked for inaccuracies and possible mistakes. The good news for E-filers is that taxpayers may qualify to file for free. This season, taxpayers with adjusted gross income of $57,000 or less in 2009 will be able to file at no cost due to a program created by the IRS and the tax software industry.
Finally, taxpayers can sign up for direct deposit. It takes weeks for a paper return to reach the IRS office, be processed, the check to be cut, and then make it to the post office. On the other hand, it normally takes between 10 to 14 days for a direct deposit check to reach a bank account. Taxpayers who want direct deposit will have to file Form 8888, but it’s a great way to speed up the filing process.
Filing in 2010
Now more than ever, filing tax returns is being made simpler and simpler for taxpayers. Those concerned with receiving their tax return money now should follow the above tips to speed up the process. There are millions of tax returns that have to be reviewed and consumers looking for quick ways to file should use every advantage available.