With tax time approaching, it is not too early to start planning. Here are some answers to some commonly asked tax questions:
1) Can I skip filing a tax return? Yes–provided that your income falls beneath the earnings threshold. Even if you are below the earnings threshold, it may make sense to file if you have had tax withheld–you should be able to get a refund of all withholding if you do not have any taxable income.
2) Should I use direct deposit? Direct deposit has a few advantages. First, the money is directly deposited in your bank account so you do not need to worry about mail getting lost or stolen. Second, the money arrives in your account 7-10 days faster with direct deposit.
3) How can I avoid scams? The IRS does not ask for personal information via phone or email nor will request payment by credit card. If you receive a call such as this, just hang up.
4) How can I avoid an audit? You probably cannot avoid an audit as clients are randomly selected each year by the IRS for review. However, what you can avoid is having an unpleasant outcome from an audit or increasing the chance of audit for your return. Returns that are more complicated or involve greater sums of money (high income, large deductions) have a higher incidence of audit. For these types of returns, it may be best to have a tax professional prepare your tax return.
5) Should I file online. Filing online allows your return to be processed quicker than by using postal mail. Filing online also eliminates typing errors that may occur when the IRS processes your return.
6) When will I get my refund? The sooner you file, the sooner you will get a refund–if you are due one. Typically, refunds are issued 7-14 business days after received by the IRS. Filing electronically greatly speeds the processing of your refund as well as using direct deposit.
7) What are the most common errors people make? The most common issues that people make is missing information, such as income from a part-time job, interest on a savings account, not signing the tax return or not affixing sufficient postage to their return. Often, these errors can be eliminated by using a tax professional.
Here is to hoping that you have a painless and successful tax season!