7 Easy Steps to an Early Tax Refund.

If you want to get your 2008 taxes in early and get your refund quickly, here are Seven Strategies to getting those dollars in your pockets ASAP. Here's what you have to do:

1. Get started

The first step is the hardest. Stop thinking about it and get moving. Until you actually start your return, you'll never finish it. That's probably going to slow down your refund. If you don't have all your numbers, just put your name and address on the form. It will get you in the mind-set to move forward.

2. Accumulate the data

January is collection month. By the end of the first month of 2008, you should have the numbers in hand. Make sure you've gotten W-2s and any statements from your brokers and banks. You'll receive 1099 forms for any interest, dividends, and sales of stock. Your mortgage company will send you a Form 1098 for any interest and real-estate taxes paid. Get those statements together and review the numbers. They're not always right.

3. Put the numbers in IRS categories

Neither the IRS nor your CPA is going to add up those numbers for you. Well, maybe your CPA. Several years ago, a psychiatrist on the Main Line near Philadelphia paid me $150 an hour to open his mail because he couldn't be bothered. In any case, don't even suggest it to the IRS.

You're going to want to have totals for the income and deduction categories the IRS provides. You'll need that final "number" if you're doing your own return, whether by hand or by computer. If you're having your return prepared, you'll want to give that number to your CPA to minimize his or her bill.

I suggest my clients use what I call the "envelope" system. You create an envelope for each of the IRS income/deduction categories. There'll be an envelope for medical expenses, charitable contributions, job expenses, interest paid, etc. Find all the receipts, all the checks, all the invoices and put them in the appropriate envelope.

If you live in a state without an income tax, don't forget to look for numbers for a possible deduction of sales taxes.

These states are: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

In December 2008, Congress extended a number of tax breaks including the sales-tax and college-expense deductions, as well as increasing the tax-free contribution limits to health savings accounts. These breaks are still on the books for 2008. Although they expire after this year, they likely to be extended for 2008 and beyond.

You can use this simple system all year. Throw all of your receipts into a file or even a shoe box. When you reconcile your checking account, on a monthly or at least a quarterly basis, you break down the checks and receipts according to the categories you selected.

By the end of January, you should have all your checks and receipts broken down in each envelope by deduction category. You add up the receipts and checks (don't double count!), and that's the number you use on your return or give to your preparer.

That's how much you've spent in each deduction category. And, with this system, you never have to fear an audit.

An audit is nothing more than the IRS asking you to prove the numbers you put on your return. You've already done that. Just hand over the deduction-category envelope with the receipts and checks. After a series of matches, it's going to be a quick audit.

4. Analyze the numbers

Sometimes, the raw numbers you have are going to be wrong.

On the income side, you're required to report any and all interest and dividends received, even if you don't receive a Form 1099.

You'll have to match up the sales of stock with the cost of those shares. The number shown by your broker on Form 1099 B is only the sale price. You're not taxed on 100% of that number. You reduce it, on Schedule D of your return, by your cost, including broker's fees. You're only taxed on the net profit.

If you don't sell 100% of your position, you'll have to allocate your costs on a per-share basis.

On the deduction side, you may have deductions not reflected by the raw data.

Say you make your Jan. 1, 2008, mortgage payment on Dec. 31, 2008. The interest you paid won't be reflected on the Form 1098 sent by your mortgage company. That's because they didn't get the check or the online payment until 2008. (If you pay online, be sure your bank records the date that you send the payment properly. A canceled check is still adequate proof.)

Paying before the end of the year transforms your January 2008 payment into a 2008 deduction, and you should run an amortization schedule to compute the additional interest. That additional interest would be shown on line 11 of your Schedule A.

5. Call your accountant

If you're going to have your return professionally prepared, call your accountant now for an appointment.

I know, you're her favorite client. But if you want an appointment tomorrow, you better call her yesterday.

In any case, once you've made that appointment, you've made a commitment to get that return done. And that means you've committed to get ready yourself. Just make sure you've got the numbers in order when you show up. Your wallet will appreciate it.

6. Put ink to paper

Or, at least, open the tax program on your computer. You've got your numbers. If you're doing your own return, put ink to paper. Go to your quiet place and actually do your return.

You've done the real work. Now you're just putting numbers in boxes. Relax; this is really the easy part. Remember, we started with how to get your refund faster.

7. Mail your return

A completed return on your desk that calls for a refund is the IRS' idea of heaven. It's your money. Don't leave it with the IRS. It's bad enough that they've held it all year without paying you any interest on your excess payment. Don't compound the pain by delaying the mailing.

Of course, the best way to speed up your return is to e-file. The IRS appreciates the cost savings and claims it expedites your refund. The IRS is offering what it bills as a free e-filing service. It's not quite free. You may still have to pay a "transmitter" to convert your return into IRS code and send it on.

Source : articles.moneycentral.msn.com

Tax Refunds: How Do They Work?

The best part about filing your taxes is getting the tax refund check! Chances are, you have been paying your taxes directly, or your employer has been withholding tax dollars from your paychecks. Many individuals overpay on their taxes, so they quickly file their taxes to get their tax refunds and soon as possible.

How do tax refunds work?

Your employer withholds some of money from your paycheck, based on a formula and the information you provided on your W4 when you got hired. This withheld amount is applied towards your tax payment to the IRS.

Because the formula is only based on the allowances you showed on your W4 and of your paycheck, it doesn’t take other factors of your life into consideration. For example, hospital expenses, tuition payments, and childcare expenses aren’t considered.

When you file your taxes, you have the opportunity to claim these expenses as deductions. A deduction reduces your overall income. Therefore, you owe less in taxes and are qualified for tax refunds.Because you pay taxes to both the federal government and to the state, you might receive two tax refunds. The amount will depend on how much you have overpaid throughout the year. To make sure you receive both tax refunds, you will have to file your taxes with both the federal government and the state government.

How do I get my tax refunds?

To get your tax refunds, you have to file your tax returns. You can do this on your own or by hiring a tax accountant or specialist. You must also make the deadline, which is usually in April, or file for an extension. You can find more information on these topics at the IRS website.

Most individuals opt to file taxes on their own to save from having to pay professional fees to tax specialists. Thanks to the Internet, almost anyone can easily file their taxes online! There are many software and program choices available online.

You will need your W2’s or 1099’s, and other documents to file your taxes. Once you have these documents, you can use online tax filing programs to plug in your information. Tax filing programs are easy to use, with clear instructions and instant help. The program will guide you through each step, and will even help you find deductions to maximize your deductions and refund checks!

Easy way to check Your Tax Refund

If you already filed your federal tax return and are due a refund, you have several options for checking on the status of your refund.

One way is to use “Where’s My Refund?” an interactive tool on simple online instructions guide taxpayers through a process that checks the status of their refund after they provide identifying information shown on their tax return. Once the information is processed, you could get several responses, including:

1. Acknowledgement that your return was received and is in processing.

2. The mailing date or direct deposit date of your refund.

3. Notice that the IRS could not deliver your refund due to an incorrect address. To ensure delivery, you can change or correct your address online.

Where’s My Refund? is a very flexible tool. Whether you split your refund among several accounts, opt for direct deposit into one account, or ask IRS to mail you a check, where’s My Refund? gives you online access to your refund information. You can even use where’s My Refund? If you filed taxes only to claim a refund of the telephone excise tax.

It also includes links to customized information based on the taxpayer’s specific situation. The links guide taxpayers through the steps they need to take to resolve any issues that may be affecting their refund. For example, if you do not get the refund within 28 days from the original IRS mailing date shown on Where’s My Refund?, you can do a refund trace online.

The “Where’s My Refund?” service meets stringent IRS security and privacy certifications. Taxpayers enter identifying information that includes their Social Security number, filing status and the exact amount of the refund shown on the return. This specific information verifies that the person is authorized to access that account and avoids an unsuccessful response.

Check Your Tax Refund Status Online

So, you were pleasantly surprised to learn that you are getting a refund on your taxes. Congratulations! The question for most taxpayers expecting a return is, "Where is my refund?" Check Your Refund Status Online.

The easiest way to check on your refund is to ask the IRS through IRS.gov. On the home page of the site, you will see a "Where's My Refund?" link. Using the service is fairly easy. You will need a copy of your income Tax Returns to provide the necessary information to get the status of your refund. Specifically, you need to provide your social security number, you tax filing status and the exact amount of your refund. The reason the IRS requires all of this information is purely for security purposes, to wit, the agency wants to make sure it is giving access only to the taxpayer. Again, all of this information should be on your return. If it is not, something is very wrong!

Once you submit the required information, the IRS will provide online results typically showing:

1. That the return was received and is in processing;

2. The expected mailing date or direct deposit date of your refund; or

3. Whether your refund could not be issued because of a delivery problem.

In some cases, the results may alert you to the fact that the IRS is reviewing your tax return because of errors or questionable entries. In such a case, it is highly advised that you review your return with a qualified tax professional and make absolutely sure that the return will stand up to scrutiny.

How Long Do You Have To Wait Before Checking?

If you filed your tax return electronically, you should be able to access the status of your refund within 48 to 72 hours. Since the return is coming into the database electronically, it should be assimilated into the system fairly quickly. If you do not file your return electronically, you are going to have to wait three weeks or more before the status of your return can be checked. As you can imagine, the IRS is receiving an enormous amount of paper tax returns and it takes time to organize and enter the returns into the system.

How Long Should It Take To Receive Your Tax Refund?

If you are expecting a refund infect Rapid Tax Refund, the time to issue the refund will depend upon how you filed your return. If you filed a paper return via regular mail, you refund should be issued in six to eight weeks from the date it was received by the IRS. Alternatively, if you filed your return electronically, you should expect to receive your Tax Refunds in three to four weeks. If you elected to have your refund directly deposited in your banking account, you should take one week off of the above estimates.

Conventional Way for Tax Filing

The easiest and quickest way to file a return and obtain a refund, is to do this electronically--a practice already used by more than half of all taxpayers. The conventional way of filing taxes with the IRS has been opposed by online tax filing systems in recent times. Filing online will allow you to get your tax refund in as little as 10 days.

The process of filing taxes online is simple and trouble free. The customer first prepares his tax papers personally or approaches professional tax consultants to do so on his behalf. After the tax papers have been prepared they can be effortlessly filed through an IRS e-file provider. Filing can be done online as well, but if an individual is not sure about the mechanics, it is better to seek professional guidance. Usually most tax experts will be licensed IRS e-file providers. The relevant documents are signed and retained by the customer for future reference. The IRS e-file provider then files the returns electronically on the behalf of the customers. Next, the IRS e-file provider sends the customer an acknowledgement mentioning the current status of the filing process.

Online Income Tax Filling eliminates the need for going through tiring steps of rushing to the local IRS offices and post offices and waiting in never ending queues to post the papers before the due date. Office hopping has been completely eliminated. The only thing required is a reliable computer and Internet connection. Mistakes and errors can be corrected online in comparatively less time. Online tax filing has reduced the time gap prior to receiving Fast Tax refunds and papers can be printed to maintain precise records for future reference. Online tax filing also facilitates tax payments using credit cards. It has reduced back office processing time considerably.

Join the millions of people who have discovered how easy, online Tax Filling can be. The cost will be much less, your tax forms will get to the IRS with no hand-written errors, and you'll get your tax refund in as little as 10 days.

Split Tax Refunds - IRS Wants You To Save Money

Split Tax Refunds The IRS Wants You To Save Money

The IRS is offering a new split tax refund option for parties that choose direct deposit for their tax refunds. Why? The agency wants to promote savings.

Let’s be honest. What is the first thing you do when you get a tax refund? Do you pay off bills? Do you put it in your savings? Buy some stocks? Nah. Most people go out and buy something with it. In highly technical financial terminology, this is known as “blowing it”.

Americans are infamous for their saving habits. Specifically, they have no such habits. As a society, we save almost none of our savings. This makes many in the government very nervous because they know sooner or later we will be looking to them for money. Social security is already a mess and an aging population is not going to help. As a result, the government takes extraordinary steps to get us to save. This is why we have 401(k) and IRA retirement options.

This year, the IRS is getting into the fray. It is offering a split tax refund option for people that choose to have their refund deposited directly into their bank account. If you file form 8888, the IRS will split up your refund as you indicate and send it to as many as three different accounts.

You are probably wondering why the IRS would do this. Well, the lack of savings issue is starting to get very worrisome. The idea is to try to get you to put some of the money in your bank account to be spent, but also some in a savings account. Yes, things are that desperate. So, does it work? A Harvard Business School study showed a significant number of people would actually use the split refund to put at least some money in a savings or investment account. Walla! Now you can.

Is the split refund option going to solve our national savings problems? No. It should, however, give you a wakeup call in relation to how worried the government is about the issue. Social security is not going to be able to carry us all.

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