Best Use of Tax Refund

greedy man with money cartoonClark Howard has good ideas to share on how to use your tax refund and make it work best for you. He also recommends you adjust your withholding this year so you are not letting the government have a tax free loan from you. Watch this video to learn more from Clark Howard who always has our backs!

Make Your Tax Refund Count by Clark Howard

Tax Refund Used to Pay Spouse’s Debt

Tax RefundIf your tax refund was used to pay your spouse’s debt, you may qualify as an Injured Spouse and be able to get your portion of the money by filing Form 8379.

Learn more with the IRS video at Tax Refund Issue – If Your Refund is Used to Pay Your Spouse’s Debt

Direct Deposit and Split Accounts for Tax Refunds

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Taxpayers can have their refunds directly deposited when they e-file or by including their account information on their paper tax return..

Banks, mutual funds, brokerage firms and credit unions are all eligible to receive direct deposits. Before making this choice, however, taxpayers should make sure the financial institution accepts direct deposits for the type of account chosen.

Taxpayers also, have the option and flexibility of splitting refund deposits, among two or three different accounts, or financial institutions. For instance, a refund could be split between a savings account, a checking account, or an Individual Retirement Arrangement (IRA). Taxpayers can split their refunds when they e-file or by filing Form 8888, Direct Deposit of Refund to More Than One Account.

A taxpayer’s refund should only be deposited directly into accounts that are in the taxpayer’s own name; the taxpayer’s spouse’s name, or both if it’s a joint account.

Those who choose direct deposit get their refunds sooner, and direct deposit eliminates the chance of a lost, stolen or undeliverable refund.

Deadline to File 2010 FICA Protective Refund Claims by April 15th

Tax RefundEmployers who paid severance pay in 2010 and paid FICA tax, should file a Protective Refund Claim by April 15, 2014. The claim is filed on Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim of Refund. This claim allows employers to be eligible for a refund, if the Supreme Court rules severance pay is not subject to FICA taxes. The Supreme Court is expected to rule on this matter sometime during the summer of 2014.

Employers using payroll services such as ADP or Paychex, should contact their payroll service provider, to discuss them filing the claim on your behalf. Both payroll providers have advertised they have this service available to their clients.

Earned Income Tax Credit – Are you Eligible?

Earned Income Tax CreditFor nearly 40 years, the Earned Income Tax Credit has been helping low- to moderate-income workers by giving them a boost to their income. Four out of five eligible workers claim EITC, but the IRS wants every eligible worker to claim and get this credit.

Here are some things the IRS wants you to know about this important credit:

Review your eligibility. If you worked and earned under $51,567, you may be eligible for EITC. If your financial or family situation has changed, you should review the EITC eligibility rules. You might qualify for EITC this year even if you didn’t in the past. Workers who qualify for EITC must file a federal income tax return and specifically claim the credit to get it, even if they do not have a requirement to file a return.

Know the rules. Before claiming EITC, you need to understand the rules to be sure you qualify. It’s important to get it and get it right. There are several factors to consider:

  • Your filing status can’t be Married Filing Separately.
  • You must have a valid Social Security number for yourself, your spouse if married, and any qualifying child listed on your tax return.
  • You must have earned income. Earned income includes earnings such as wages, self-employment and farm income.
  • You may be married or single, with or without children to qualify. If you don’t have children, you must also meet age, residency and dependency rules.
  • If you are a member of the U.S. Armed Forces serving in a combat zone, special rules apply.

Lower your tax or get a refund. The EITC reduces your federal tax and could result in a refund. If you qualify, the credit could be worth up to $6,044. The average credit was $2,355 last year.

Use free services. Don’t guess about your EITC eligibility. Use the EITC Assistant tool . on IRS.gov. The tool helps you find out if you qualify and will estimate the amount of your EITC. The best way to file your return to claim EITC is to use IRS Free File.  Free brand-name software will figure your taxes and EITC for you. Combining e-file with direct deposit is the fastest and safest way to get your refund. Free File is available exclusively on IRS.gov/freefile. Free help preparing and e-filing your return to claim your EITC is also available at thousands of Volunteer Income Tax Assistance sites around the country.

If you are a member of the U.S. Armed Forces serving in a combat zone, special rules apply.  For more information, see IRS Publication 596, Earned Income Credit. It’s available in English and Spanish on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:Schedule EIC

Want to Check on Your Refund? – There’s an App for That!

IRS Smartphone AppAre you on the go but need the latest tax information at your fingertips? There’s an app for that. The latest version of the innovative IRS2Go app is now available.

Here’s what you can do with the redesigned IRS Smartphone app IRS2Go, version 4.0, available in English and Spanish:

  • Check the status of your refund.  The new version of IRS2Go includes an easy-to-use refund status tracker so taxpayers can follow their tax return step-by-step throughout the IRS process. Just enter your Social Security number, filing status and your expected refund amount. You can start checking on the status of your refund 24 hours after the IRS confirms receipt of an e-filed return or four weeks after you mail a paper return. Since the IRS posts refund updates on a daily basis, there’s no need to check the status more than once each day.
  • Find free tax preparation.  You may qualify for free tax help through the IRS Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs. A new tool on IRS2Go will help you find a VITA location. Just enter your ZIP code and select a mileage range to see a listing of VITA/TCE sites near you. Select one of the sites and your Smartphone will show an address and map to help you navigate.
  • Get tax records.  You can request a copy of your tax bill or a transcript of your tax return using IRS2Go. The post office will deliver to your address on record.
  • Stay connected.  You can interact with the IRS by following the IRS on Twitter @IRSnews, @IRStaxpros and @IRSenEspanol. You can also watch IRS videos on YouTube, register for email updates or contact the IRS using the “Contact Us” feature.

For more information on IRS2Go and other IRS social media products, visit IRS.gov.

2014 Tax Filing Season for 1040 Filers Opens January 31, 2014

irs with 1040The Internal Revenue Service announced they plan to open the 2014 tax filing season for all 1040 filers filing their 2013 income taxes, on January 31, 2014. This includes all small business owners that file on Schedule C as sole proprietors, Schedule F as Farmers, or Schedule E as landlords. Anyone expecting a tax refund is strongly encouraged to file electronically (e-file) to receive their refund in the fastest manner.

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