Tips to Maximize Your 2017 Tax Refund
Tax Refund Money
The holidays are here, which means that it’s almost tax time. We’re sure that in the midst of travel, friends, family, and food comas, that the last thing you want to think about right now is taxes. However, many of us tend to have some extra down time around the holidays, and we believe that’s a good time to start organizing and strategizing for next year’s taxes.
Get started early
While it’s impossible to project all of your expenses and income, it’s not a bad idea to start budgeting and planning now to get ahead of the game–especially if you plan any large purchases.
Get organized now
Planning to build a home office? Major home upgrades? New degree? Sending a child to college? Develop a roadmap for your major expenses or changes to income.
Research deductions
Deductions are numerous – all of the aforementioned examples could qualify for a tax deduction. Know your deductions; doing so may help you plan any major expenses and can get you ahead for subsequent tax years.
Get an app
From spreadsheets to dedicated tracking apps, expense and income tracking software is truly indispensable. Shelling out a few dollars for some budgeting software can help keep you organized for tax time, which can help you both balance your budget and increase your tax refund. That being said, always remember to back up your records!
Consider a CPA
Although we’ve often lauded the benefits of budget balancing software, that doesn’t mean it’s an adequate replacement for a good CPA. Rather the two are complementary: software can keep you organized, which can help your CPA make sense of your finances. In turn, a good CPA can help you with tax deductions and business recommendations, thereby maximizing your tax refund.
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How to Maximize Your Tax Refund
Tax Refund
Taxes may not cross the minds of many people until January or February, but planning ahead can greatly benefit the size of your return. From planning to tracking, here are a few tips to help you get the most out of your return.
Be organized: keep records of everything! For expense tracking, make copies of receipts or keep the originals, write down mileage, and hold onto any bills or invoices. Keeping the originals will be helpful to both you and your CPA. Make all your files easy to access and manage, which will make your life easier in the event of an audit. Your CPA will thank you, too.
Maintain records throughout the year: as previously stated, keep track of everything! Logging expenses and deductions throughout the year can save you a ton of time and stress at tax time. You don’t want to play catch up at the 11th hour; doing so is stressful and could cause you to overlook deductions or make mistakes on your return. Struggle with organization? Never underestimate the usefulness of spreadsheets, or a good expense tracking app. Or both.
Dedicate time to researching deductions: plan ahead for which deductions and credits you want to claim. Doing so will minimize stress when you are filing taxes, and will help you ensure that you qualify for the deduction. If you employ a CPA, discuss your intended deductions and tax credits: they can make sure you qualify and can help you maximize your return.
Find a good CPA: returns, deductions, credits, tax shelters, it can all be confusing and a good CPA can help you make sense of all of it.
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How to Correct or Amend a Tax Return
If you recently filed a tax return but had any incorrect information on it (number of dependents, filing status, total income, deductions or credits), you will need to fill out an amended tax form, Form 1040X. Here are some tips to help with filing this form.
- You don’t need to file an amended return if you made a simple mathematical error. The IRS tends to fix this and sends out a letter notifying you of these changes. If you are missing a paper, the IRS usually sends out a request for the missing information, so you won’t need to file the Form 1040X.
- You cannot e-file an amended tax form. Regardless if you’re amending a 1040, 1040A, 1040NR, 1040EZ or 1040NR-EZ, you need to file your form 1040X through a paper submission that needs to be mailed into the IRS.
- If you have to file multiple amended tax returns, file and send each one separately. Never combine your amended tax returns for multiple years because the IRS will send it back and request you fill it out separately for their records.
- If you’re changing the tax forms or adding in more forms and documents, make sure to attach them to the Form 1040X to help expedite your amended returns.
- If you are expecting more money, wait until your original tax has been refunded to you before filing the amended tax file. You can cash in the original amount on the check and the IRS will send out the remaining balance after receiving your Form 1040X.
Expect processing times to take around 8 to 12 weeks to receive your refund for your amended tax form.
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Why Paying More in Taxes is Great for Workers
Paying taxes is an onerous task for most people, but paying more taxes may have a number of beneficial side effects.
Tax Withholdings
Over the course of 2016, the growth of employee tax withholdings, as well as the growth of payroll taxes being withheld by the government, has increased over a steady rate this year. Compared to last year, these withholdings have increased up to 4%.
So how is this good for you, as a worker?
The increase in tax withholdings gives insight onto two noticeable benefits. The first is that when taxes increase for workers, both individually and as a whole, a steady wage inflation takes place. Basically, workers are getting paid more money now versus previous years. This means the economy is showing a significant growth in employment.
The second benefit that is noticed through higher taxes from workers will be their refund amounts. With higher taxes and withholdings, the more workers can expect back in the beginning of the year after they file taxes. Most people fall within the tax bracket to get a return back, so filing more money in advance can reassure you have paid all your taxes. Increasing your withholdings can also be a little investment savings annually.
Although paying higher taxes seems detrimental at first, it can be more beneficial for workers than they realize. With a constant inflation in the economy, we can expect workers to pay even more in the following years in taxes.
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What Sort of Delays Can We Expect for 2017 Tax Refunds
The IRS is working to reduce tax fraud, which will result in some refunds being delayed. The delays are said to affect mainly those claiming the Earned Income Tax Credit (EITC/EIC) and Additional Child Tax Credit (ACTC). If neither of these situations applies to you, no delay should be experienced.
Electronically Filed Returns
Even if you file your tax return electronically, if you are claiming either the EITC/EIC or ACTC, you may experience a delay due to increased verifying procedures. The IRS must now verify every return down to the penny that is claiming either of these credits.
Special Deductions & Credits
If you are filing early and claim either the EITC/EIC or ACTC, your refund is likely to be delayed slightly this year. The IRS has to verify that you can receive any funds remaining after claiming the regular Child Tax Credit, which would result in you potentially being eligible for the Additional Child Tax Credit.
Paper Filers
Paper filers may experience normal delays, due to mail delivery processes. It is actually a better option to file online as it is virtually impossible for your return to get lost using this method. It typically takes paper filers longer to complete their returns too.
Closing Thoughts
The IRS is still expecting to process returns within 21 days, but some refunds may not be issued until February 15, 2017 for those that file early. Given the fact that Americans are more aware of credits and deductions, the size of the average tax refund has increased. This has prompted the IRS to look closer at returns to find additional cases of tax fraud.
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Is Your Tax Refund Safe?
For the most part, your tax refund is safe. There are few instances in which your fecund may be in jeopardy. Thieves are on high-alert during tax season, watching bank accounts and mailboxes. Here a few tips you can use to maximize the safety of your refund.
Use a Secure Banking Institution
It is best to use a well-known and reputable banking institution. This helps provide some reassurance that your bank will not be hacked and funds stolen. Security breaches do not happen often, especially with banking institutions, but using a larger institution is often a better idea due to the increased security measures put in place.
File Electronically
Filing electronically really is the safest way to file your taxes. When you file electronically, select the direct deposit option. This is the most secure option. The IRS computer system is very secure.
Paper Checks
Paper checks are the most vulnerable. These can get lost or stolen during mail delivery. Mistakes do happen where mail is delivered to the wrong home, and in most cases, the checks are returned for redelivery. If you do not receive your refund by the estimated date given, contact the IRS to inquire.
Always know when your refund is expected. Allow an extra 48 hours in case there is a backup in the mail system or computer processing of your refund. When your refund is definitely late, you can view the status of your refund on the IRS website. When additional questions exist, contact the IRS via phone and patiently wait for your turn in line as wait times are substantial.
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