If you are confused between a tax refund and a tax return, you are not alone. These key terms are pretty confusing for most people. Tax returns are the forms filed by you annually that outline your expenses, income, investments, and all other tax-based information. It is the form that you file with the Internal Revenue Service (IRS) and the state government (in case your state charges income taxes).
On the other hand, you get tax refunds when you end up paying more taxes to the federal or state government than the actual tax liability that you have. In case of tax refunds, the government will give you a check for any amount that you have overpaid.
How to know if you’ll get a tax refund
Whether or not you will get a tax refund depends on your financial condition. You can use the online tax estimators to get an idea about the tax liability. It will easy to figure out your tax burden when you have a simple tax situation, according to Matthew Ledvina, a certified tax advisor in the country. Tax estimators can be of help in letting you know if you should prepare your finances for a cash influx or you will owe money on the tax day.
Who receives the tax refunds?
If you had overpaid your taxes during the year, you can hope to get tax refunds. You will have to file the tax returns to get the money that the federal or state government owes to you. Do not think that refunds are some kind of free money. It is rightfully yours to receive. In fact, experts like Matthew Ledvina call the money from tax refund as the interest-free loan given to Uncle Sam. You should use this money wisely to fund other financial goals, boost the emergency savings, or grow in retirement accounts.
Are there ways to get bigger tax refunds?
You need to be more organized if you want to save money. You will have to track tax documents, forms, and receipts throughout the year. The necessary papers that you need to check might include receipts for property tax forms, student loan interests, charitable donations, and other relevant documents. You can choose to use a spreadsheet or a digital organizer to keep track, as long as you remember to keep tabs on all the documents.
Keeping a track of the tax refunds
The IRS delivers most of the tax refunds within twenty-one days of filing. If you want to know when the refunds will reach you, track the status of the refund from the IRS website. You can also forward a request to have the refund delivered as a paper check or an electronic transfer.
You will find the ‘Where is my refund?’ tool at the IRS website. The IRS app will also help you in this regard. If it has been more than twenty-one days or six weeks since you filed the tax returns, contact the IRS to know more.
Published by Matthew Ledvina
Through his almost 15 years of experience working as a US tax adviser, Matthew Ledvina has provided advice to his clients on areas involving trusts, banking and taxation. This has required him to work in several of the world’s major economies, including the United States, France, the United Kingdom and Switzerland. Matthew holds memberships to multiple professional bodies, such as the Society of Trust and Estate Practitioners, the International Tax Planning Association, the International Bar Association, and the International Business Structuring Association. Serving in several senior positions for global tax advisory firms, Matthew has worked with clients in countries that span every continent, including Switzerland, Italy, France, Spain, the United Kingdom, the US and Canada, as well as in Asia and Latin America. Matthew co-founded a law firm in 2010 with locations in Geneva, Zurich and Madrid. The firm offered services that were focused on providing assistance and advice on taxation and trusts, serving clients in the US, France, Spain, Italy, Middle East and Latin America. Amongst other activities, he is currently a cross-border US tax adviser for Pilotage Private Office and a director for a leading Fintech company in London which focuses on asset-backed lending servicing the needs of family offices.Matthew became heavily involved in the US Department of Justice’s Swiss Bank Program through his work with Swiss clients. This has seen him undertake voluntary disclosures for clients who have assets in banks and other financial institutions based in Switzerland. In his spare time, Matthew enjoys playing tennis and skiing. In addition, he regularly reads about topics such as artificial intelligence, history, Regtech in the insurance and banking area, and Fintech focusing on asset-backed lending.View all posts by Matthew Ledvina
