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Tax Refund

What Are the Consequences for Filing a Late Tax Return?

What Are the Consequences for Filing a Late Tax Return?

By on Mar 17, 2016 in Filing Taxes, Tax Refund, Tax Tips, Taxes | 0 comments

The short answer: money! The consequences of filing a late tax filing could very well cost you money. So it’s important to make sure that you are aware of the tax deadlines. It is equally important that you make the necessary preparations needed in order to file your annual taxes in a timely manner. All too often, not having the required documentation or information will inevitably cause delays that can possibly result in a late filing. If for any reason, your filing is late, penalties will occur. Delaying Your Potential Return There are two types of failure penalties: failure-to-file and failure-to-pay. The failure-to-file penalty is usually more than the failure-to-pay penalty. If for some reason, you are not able to pay the full amount of taxes owed, it is recommended to still file your annual taxes before the deadline and pay as much as you can afford. Then call the Internal Revenue Service (IRS) to discuss possible payment options. The IRS will be more than happy to work with you. Type of Late Penalties Failure to File The penalty for a late tax filing is approximately 5% of your unpaid taxes for each month that it is late. The failure to file penalty will not be more than 25% of your unpaid taxes. According to the IRS, if you submit your filing60 days after the deadline or the extended due date, the minimum penalty is the lesser amount of $135 or 100% of the unpaid tax. Failure to Pay If you neglect to pay your taxes before the deadline, you will be charged a failure-to-pay penalty of ½ of 1% of your unpaid taxes for each month after the deadline that the taxes aren’t paid. This penalty can cost up to 25% of your unpaid taxes. If both the failure-to-file penalty and the failure-to-pay penalty apply in the same month, the 5% failure-to-file penalty will then be reduced by the failure-to-pay penalty. If you submit your filing 60 days after the deadline or extended due date, then the lesser penalty of $135 or 100% of the unpaid tax will be due. Exception You won’t have to pay a failure-to-file or failure-to-pay penalty IF you can prove that the reason...

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Why Does It Take So Long To Get Your Tax Refund?

Why Does It Take So Long To Get Your Tax Refund?

By on Oct 24, 2015 in Filing Taxes, Tax Refund, Tax Tips | 0 comments

It is never too early to talk taxes! After all, the Internal Revenue Service (IRS) works all year.  According to the United States Census Bureau, the United States has approximately 321,859,950 citizens and that number is increasing. Granted, a great percentage of this number involves people who aren’t even old enough to pay taxes. However, this number should give one a general idea of why it usually takes a long period of time to receive a refund. The Filing Process Take a moment and think about the time it takes to file taxes. For even the most prepared individual, it can be a grueling process. That is why most people hire someone to take care of it for them. Even then, there’s no completely escaping the responsibilities of a taxpayer. For, one must supply the proper documents in order to file. As it can often take anywhere from a day to maybe even a week to file taxes, when the IRS receives the filing, they must verify that the filing is indeed correct. So in fact, it is almost like your tax filing is being process twice: once by you and then by the IRS! Unlike the individual taxpayer, the IRS receives millions of submissions that they must verify. That is one of the reasons why tax filings take so long. Other reasons can be due to misinformation and how you file. Ways to Expedite Your Tax Refund Any misinformation or input that the IRS believes is questionable in your tax filing can delay the verification process. It is also recommended to file your taxes as soon as you receive your W2s, 1099 and other important tax related document. The sooner you file, the better chances you have to receive your tax refund at an early date. Another determining factor on whether or not you might get your refund early is if you choose to file electronically and if you have a bank account. The Benefits of Electronic Filing Filing your taxes electronically expedites the filing and verification process. The IRS also gives tax filers the option to receive their refund by check that will be mailed—a process that can take 3-4 months, or by having it electronically deposited...

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Best Ways to Use Your Tax Refund

Best Ways to Use Your Tax Refund

By on Sep 15, 2015 in Tax Refund | 0 comments

For some, one of the main benefits of tax season is receiving a refund. In fact, some taxpayers eagerly wait for that bulk sum of money as soon as they’ve received the prior year’s refund! Basically, they are spending money that they don’t even have yet. Big mistake. While it is always good to plan when it comes to organizing finances, it is usually recommended to plan accordingly—when you actually have the cash on hand. There are too many life circumstances involving tax filing that can alter the state of a tax refund, possibly even turning it to a payment. No one wants that! It is highly recommended to make sure your tax preparer has verified your refund with the IRS. THEN, you can start planning on how to spend that money. While it’s always good to treat yourself, it’s also advantageous to be smart with your finances and make it work for you, instead of spending it like there might be a hole in your pocket! Understand Where Your Tax Refund Comes From Your tax refund is money that you have already earned from the previous tax year. It is money that has been taken from your check. Sometimes, the government takes too much and gives it back to you once you have filed your taxes in April depending on any life changing events, credits, and standardized deductions that may apply. What to Do With Your Money Once the tax preparer or IRS has verified your tax refund amount, it is most helpful to start consider how you can spend this money rather than what can be bought with it. Here are some of the best ways that one might want to spend their tax refund: Save, Save, Save! This might be the wisest thing to do. In these economic times, it is always best to have at least 2-3 months worth of income saved up. It is understood that not everyone is in the type of financial situation to do this. Yet, keeping something in your savings account is better than nothing, even if you are only able to save a little. Investing in an IRA is also a smart way to save. Use Your Federal Refund...

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3 Factors That Will Affect Your 2015 Tax Return

3 Factors That Will Affect Your 2015 Tax Return

By on Apr 23, 2015 in Tax Refund | 0 comments

While tax law doesn’t see huge changes year over year, there are many small changes that can affect your return this year. Awareness is key to maximizing your refund or decreasing the amount you owe. Knowing what issues you may encounter will make things go a whole lot faster when it comes time to file. 1.     Obamacare Under the Affordable Care Act (ACA), all Americans are required to have health insurance. While this might not seem to be directly related to your taxes, it is. At minimum, you will have to attest to the fact that you and your entire family have health insurance (via Form 1040) by checking a new box on your tax return. For those that receive health insurance from their employer or via a government program (Medicare/Medicaid), that is the extent of the impact. However, if you purchased health insurance through the Healthcare Marketplace in exchange for tax credits, read on. Tax time is when the government is checks in with you to make sure that you still have health insurance and that you did not receive too many tax credits/subsidies when you purchased your health insurance. If so, it is possible that you underestimated and could have to pay some of that back. In this case, you should have received a 1095-A verifying that you have insurance. You can use this to complete Form 8962 to determine if you got the right amount of financial assistance for your health insurance. It is possible that your refund will increase or decrease depending on this calculation. 2.    Other Big Life Events If something changed significantly in your life this year, you could expect to see a noticeable change on your tax return. Some examples of a big life event are marriage, divorce, birth of a child, death of a spouse, buying or selling a home, moving for a job or starting your own business. The impact on your return could be either positive or negative, but you want to be mindful that your return may be very different in years when significant life events occur. 3.     Changes in Your Income The biggest factor that can impact your tax return in the coming year is a...

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How to Avoid Going to Texas Tax Court

How to Avoid Going to Texas Tax Court

By on Jan 5, 2015 in IRS, Tax Refund | 0 comments

Tax court is probably one of the last places you want to land in Texas – or anywhere for that matter. The truth is, if you lose an audit and have yet to reach a settlement with the IRS, you may have no choice but to try to settle your dispute in tax court. But if you are still a few steps away from tax court, then take note of the following tips for avoiding that scenario all together. Review Your Tax Return and Documentation for Errors Obviously, the easiest way to avoid an IRS audit and/or tax court is staying OFF the IRS’ radar. The best way to do this is to complete and submit accurate returns, make sure that your reported income matches your W-2s and make sure that you have all back-up documentation for your deductions accessible in case there is a question. Check your return for arithmetic errors and make sure that all of your personal information is correct (name, address, social security number). The cleaner your return, the less likely you will be audited and you can enjoy a life without tax court. Provide All Requested Information If the IRS makes contact with you (this will happen by mail), then respond with all requested information. Answer the question(s) that you are asked and make sure to provide copies of any documentation that helps your case. Respond Thoroughly and On Time The absolute worst thing that you can do if the IRS has a question or makes a request is doing nothing. Nothing good will come of this and you will just increase your chances of being audited and landing yourself in tax court. Ignoring the IRS is never a good idea. Get Strong Support As soon as the IRS initiates contact, you may want to enlist the help of a tax firm with experience navigating complicated issues with the IRS. Located in La Porte, Success Tax Relief has helped thousands of residents stay out of Texas tax court. Success Tax Relief has a proven track record of success dealing directly with the IRS, responding to their inquiries, and providing strong audit support so that you can avoid tax court. Strong representation can make a...

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How to Choose the Best Federal Withholding for You

How to Choose the Best Federal Withholding for You

By on Oct 3, 2014 in Tax Refund | 0 comments

Most often when you work and receive income, your employer withholds taxes from your pay. These taxes are paid to the IRS in your name and at the end of the year when you complete your tax return, you determine whether you have paid a bit too much (and get a refund) or a bit too little (and pay the difference). Taxes are also withheld from other types of income including bonuses, commissions and even gambling winnings. So, when you think about your withholdings, your ultimate goal is to withhold enough so that you do not have a large tax bill come April 15th, but not so much that you have a huge refund either. After all, that refund could be money in your pocket throughout the year! Your Withholding: Get It Right! Estimating your withholding and choosing the best federal withholding for you is a critical part of the annual tax process. We have pulled together some information that will help you sort out this sometimes complicated process and get it right this year! W-4: The IRS uses the amount you earn annually along with the information you provide on your W-4 to determine how much they withhold from your paycheck. To make adjustments to this, you need to amend your W-4 form. You can do this at anytime and can often request a W-4 form from your HR department. Often, when you start a new job, your employer provides one and suggests that you complete it. You should note that generally your employer cannot advise you how to complete this form. Coming up with the correct withholdings for you: There are many factors that go into estimating your tax withholdings. You can use tools like the personal allowance worksheet and the deductions and adjustments worksheet to incorporate your unique personal information with your earned income to arrive at your optimal withholding. You will use information such as filing status, allowances (for you, your spouse and any dependents) and any tax deductions and credits that you plan on taking to help you calculate your withholding. Helpful Hints: Once you have completed the worksheets described above, use the IRS wage bracket tables (on their website) to see exactly how...

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