It takes an incredible percentage of brain space to e-sign and file tax returns once a year. After that, most people forget about taxes until their refund check arrives in the mail (or is deposited in their mailbox).
While this pattern seems reasonable to most people, there are a few things you should do after filing your taxes.
It may not seem like it makes a difference, but taking a few steps now can help you prepare for the future.
Make sure your return is approved by the IRS
National Tax AgencyWhere are my refunds?”The tool is not only used to monitor refunds. You can use this to check if your return has been received or approved, or if your check has already been mailed. In some cases, the status may include a “reference code”, which may or may not require action on your part. Here is a list of the most common “Where’s my refund?” Status code.
Tax filers can start checking the status of their returns within a day or two of electronically filing their returns. (She will have to wait four weeks for confirmation if she chooses to submit by mail).
Due to staffing issues, the IRS continues to report delays in late submissions, which can result in returns being in the “Received” status for an extended period of time. However, the IRS will generally process returns for the current year before collecting any outstanding payments.
Fix errors on your tax return
While tax software can prevent clerical errors, the IRS may flag certain issues such as inaccurate business deductions or incorrect dependent claims. If the IRS reports an error, you must file a 1040-X to correct your tax return. Many tax software programs allow filers to amend this year’s returns for free or for an additional fee.
If you make a mistake, you should correct it as soon as possible so that you can collect your refund (or plan your payment). However, don’t rush this step, especially if he thinks the IRS has erred. Companies like Community Tax can help you find the cause of the problem and fix the errors.
Create a tax plan if necessary
If this is your first time making an IRS payment, you may be in for a surprise. Most people have received small refunds over the years, but they may still be in debt with the IRS due to casual income or switching to self-employment.
When you owe IRS money, you need to have a payment plan.The IRS payment plan can be a good starting point, but a low-interest loan may be a better option. This article details what to do if you are behind on your taxes.
Adjust withholding or quarterly tax payments
Most W-2 employees have taxes withheld from their paychecks. Typically, an employer who has properly completed her federal (and state) W-9 form will receive a small rebate each year. However, some will receive huge refunds, while others will end up borrowing state or federal money.
To resolve this issue, the employee should resubmit the W-4 form to Human Resources. (Most states have an equivalent format). If you received a large refund, you should claim more benefits than you are currently claiming. If you owe money, you’ll want to charge less allowance.
Very high earners may need to deduct additional money from each paycheck to ensure they don’t owe the IRS at the end of the year.
Self-employed people (and small business owners) typically need to know their tax due through quarterly tax estimates. If you have a lot of debt (compared to your income), you’ll want to increase your quarterly tax payments next year. This will prevent you from going into too much debt at the end of the year.
Keep a copy of your tax return
Under all circumstances it is important to keep copies for a minimum of three years. If you claim bad debt or worthless securities, you must keep records and tax returns for seven years. If you owe taxes, you must keep your tax return for two years after paying off your debt.
Keeping your files for 3 years will allow you to file revised tax returns in the future in case you discover errors in your favor.
Most recommended tax software programs give users access to electronic filing for three to five years. However, software systems may change ownership, and users may not have access to records for weeks or months. Don’t you think this could happen to you? That happened when Cash App Taxes bought Credit Karma Taxes.
Additionally, it’s important to keep a PDF copy if you want to change your tax software.
Download your returns and store them in a cloud location (I prefer Dropbox, but any other secure site is fine) rather than asking the software company to keep records. There is no need to print a copy of your tax return if you can access it online.
Use tax refunds wisely
Some people get small bonuses throughout their career. Others receive an inheritance. But a tax refund may be one of the few financial surprises most people experience a few times in their lives. It’s tempting to use the money from the refund to pay for vacations or put a down payment on a pickup. should be considered).
A tax refund is not a gift from the government. It’s hard earned money. Now that money is back in your pocket, it makes sense to make it work for you.