How to do e-filing Income Tax Return

How to do e-filing Income Tax Return

by | Nov 17, 2017 | Tax Refund

How to do e-filing Income Tax Return

Filing your income tax return using paper submissions is soon going to be a thing of past. There are doubts about the fact that e-filing of income tax returns are getting more and more popular as days pass by. And there are enough reasons for the same as well.

E-filing enables you to a much faster processing of the returns, faster refunds if you are eligible for any and also is more accurate.

The following are the steps how you can proceed with the e-filing of your income tax returns.

Information Gathering

Though you would be filing your returns electronically, it doesn’t give you the liberty to fill up anything on the forms. You need to spend some time and do the due diligence to get all right set of information before you can begin with your e-filing process. You need to gather information regarding all tax deductions and tax credits earned. If there are any other items that might help you reduce your tax obligation, you would need to keep a track of those as well. There are no hard and fast rules to have these set up, but they help for a much smoother tax filing process.

Choose a platform

There is more than a way of filing tax returns for a specific financial way. There are websites that offer the services for free, whereas there are certain websites that offer their tax preparing software at certain costs. You could alternatively use the free filing program by IRS to have your taxes done. The coalition between IRS and Free File Alliance LLC brings forward free e-filing of tax returns for individuals.

Filing up the tax forms

All the information that you manage to gather at the first step will come in handy. No matter which mode of e-filing you pick, you will have to fill up the tax forms. Filing tax returns using online websites makes things way easier, however, one has to be extremely careful regarding the same. The data or information provided as part of the application filing has to be as accurate as possible. Any discrepancies or differences will come back to haunt you at a later stage.

E-filing of tax returns

Gone are the days when you had to fill up application forms, get hold of envelopes in which the application forms fit in, and then get postage stamps and finally post them to the IRS. Electronic tax filing makes this entire process a whole lot easier and convenience is at its forefront. Tax filing season translates to a nightmare for a lot of individuals, not knowing what exactly to do or how to get started. All that you need is a computer that has access to the internet and you can proceed with the same. IRS allows you to e-file any one of the forms namely Form 1040, Form 1040A, Form 1040EZ, 1040NR or Form 1040-SS. If you are using any of the e-filings software for tax returns things are relatively easier. They ask you a bunch of questions up front and do all the calculations on your behalf.

The forms have provisions for expenses as well as deductions. The website consists of all the latest updates from the IRS website, thus you need not worry about the same. You just have to fill in the details pertaining to you and the website or the computer does all the calculations. The moment you are content with all the information, with the click of a button the tax returns will be on their way.

E-filing the taxes allow you to bring down the chances of human errors dramatically. E-filed tax returns usually receive refunds within 21 days, thus they are incredibly fast as well. The convenience and ease along with all these benefits are something that you cannot ignore for sure. IRS pays a great deal of attention to the security or confidentiality of the information provided on the websites. The convenience and ease along with all these benefits are something that you cannot ignore for sure.

 

IRS Process to File Tax Returns

IRS Process to File Tax Returns

by | Nov 10, 2017 | Tax Planning, Tax Refund

IRS Process to File Tax Returns

Getting through the tax returns process is a chore that most of us would not like to a part of. However, it is a necessity that needs to be covered at any costs. If you have somehow managed to face your demons and file your taxes and tax return, the next step is waiting for a tax refund if you qualify for any. But before we get to how long it is going to take for your refunds to be dispatched or credited, it is important to know the internal process as well.

Deadlines

The IRS is no stranger when it comes to deadlines. They have a very strict timeline that they have to follow and ensure that all the returns are filed for individuals as well as businesses. 15th of April is the final deadline before the returns have to be filed. Unless the same is on a holiday, in that case, the next working day acts as the deadline. In case of extensions, the modified timelines come into effect. The deadline for filing tax returns for individuals is the 15th of April. As far companies or organizations go, the deadline of March 15th mostly holds good. The last date for organizations and companies is the 15th day of the third month of a fiscal year. If you have opted for an extension of the tax return date, the deadline shifts to the 15th of October (6 months from the actual due date). The IRS starts processing the tax returns as soon as they receive them. No matter what the source is, electronic or paper submissions, the returns follow a first come first serve basis.

Post Tax Filing

As soon as you file or e-file your tax returns you can expect an acknowledgment from the IRS within 48 hours of the filing. If you have e-filed your taxes, you will receive an acknowledgment email within the prescribed time. Individuals who chose a different form to file their taxes will receive the acknowledgment via the same method. On receiving the acknowledgment letter from the IRS successfully, you can then visit the IRS website to track your application. You need to visit the IRS website and look for the “Where is my refund?” option. Once you fill in the necessary details, you should be able to track your application and its status. However, you will not be able to track the status of previous year filings or tax return files with amendments.

Tax Refunds

While filing up the tax returns, you need to specify a mode for refunds, if there are any. The only two modes available are a direct transfer to the account or mailing of a cheque. Even IRS prescribes using the direct transfer mode, as it eliminates any chances of the cheques getting lost in transit. Also, direct transfers allow for a much faster turnaround time. If you are expecting a tax refund and have opted for the direct transfer mode, the same would be reflected in your account in less than 21 days once you file the tax returns. For all the individuals who opted for physical tax returns or cheques, the time taken is relatively longer. The refunds usually take about 6 weeks of time. You can enter the details of the mode of refund in your tax return form under the Refund section. You can enter the same when you are filing for tax returns using websites as well.

In some cases, individuals do not receive their refunds within the allotted time. If you are facing such a situation where you haven’t received your direct transfer refunds in 21 days or physical refunds in more than 6 weeks, you should reach out to the IRS.

Best Investments for Boosting Your Tax Refund

Best Investments for Boosting Your Tax Refund

by | Oct 24, 2017 | Investment & Income, Tax Refund

Best Investments for Boosting Your Tax Refund

If you go by history or statistics a large number of taxpayers will receive tax refunds. Take the year 2015 for an example, where about 80% of taxpayers received refunds of $3000 or more. Consider that the 80% is out of a total of 150 million individuals. You would certainly want to be in that 80% and even push for higher refunds. We will take a look at some of the best investment tools. These would not only boost your portfolio but also help you bag bigger tax refunds.

Where to invest?

Retirement planning comes to your rescue when it getting better tax refunds is your concern. Simply because they have the capabilities of boosting up your refunds. We all are aware of IRA or Individual Retirement Account, but what most of us are not aware of, is that it provides double benefits when it comes to taxation.

Not only does IRA allow deductions till a certain limit, but also can help you get refunds if your income is within an acceptable limit.

Using a traditional IRA you can avail deductions up to $5500 and up to $6500 if your age is 50 and above.

You can opt for the Retirement Savings Contribution Credit, under which you stand to get tax credits of up to $1000 if filing as an individual or $2000 if married filing jointly. You just need to figure out if you qualify for the credits or not. If you do, do not hesitate to open a traditional IRA and claim tax credits.

A lot of individuals invest their money is Roth IRAs. Things pan out a bit differently in this case, as you cannot deduct your investments using Roth IRA. However, investments in Roth IRA are eligible for Retirement Savings Contribution Credit.

Other investments for tax credits

Investing in Roth IRA or traditional IRA gives you the opportunity to increase your tax refunds provided your income is within certain limits, we will discuss those limits later on. But there are other forms of investments as well, with which you can benefit from the Retirement Savings Contribution Credit.

401(k)

We generally know 401(k) as the retirement plan that an employer sponsors. Apart from the employer’s contribution, you also contribute for the same before taxes. With 401(k) you have the control over the investments. You can choose from mutual funds, bonds, stocks and some other market instruments. The most popular ones being target date funds, which eventually become low risk as you near your retirement. Money that you invest in 401(k) is also eligible for Retirement Savings Contribution Credit.

403(b)

The 403(b) is a retirement plan which is applicable for a limited audience, namely educational institutions and certain non-profit organizations. The plan is tax deferred in nature, meaning they are nontaxable till they grow (usually till retirement). Once you withdraw them post retirement, normal taxation is applicable to them. Investment in 403(b) also qualifies for the Saver’s tax credit.

SARSEP

Companies that have an employee base of 25 or fewer, can avail the SARSEP or Salary Reduction Simplified Employee Pension Plan. With the plan, employees can invest pre-taxed money to their IRA as part of their salary deductions. SARSEP also qualifies for Saver’s tax credit.

One of the best ways for boosting your tax refunds is to look out for eligibility of different tax credits.

There is, however, a small caveat to that piece, you need to be in the low to medium income range to benefit from most of the tax credits if not all. The upper cap for income levels for various categories are:

  • $30750 for single filers
  • $46125 for head of households
  • $61500 for married filing jointly

If you are within these income limits, the above mentioned investments can boost up your tax refunds substantially.

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