Tax Refund

Reduce your taxes with a
personalized tax plan

Our experts review your unique situation and recommend proven tax strategies to lower your tax bill.

By selecting Learn More,
you will be leaving Intuit’s site.

Quick answer: If you overpay your taxes, the IRS will simply return the excess to you as a refund.

While some might think that taxes are an inconvenience, they actually serve many good uses, including funding health programs, food stamps, disability benefits, and defense programs. 

When you pay too much in taxes, however, it creates an interest-free loan to the government that is more than your fair share. This causes you to take home less money per paycheck and essentially has the government holding onto your hard-earned money until tax season. Whether you want more money in your paycheck and less taxes withheld or a bigger tax refund at tax time and more money withheld from your paychecks is a preference. For many the tax refund is the biggest check they receive all year and they prefer to receive a tax refund at tax time, because if they have the additional money in their paycheck they may spend it.  TurboTax has tools to help you estimate your withholding, whether you prefer a tax refund or want more money in your paycheck.

Here is more of what you need to know about withholding and overpaid taxes.

How Do I Know If I Overpaid My Taxes? 

If you’ve overpaid your taxes, you’ll end up getting an IRS refund once you’ve filed your taxes. This is the clearest sign that you’ve overpaid, as the reason you’re getting a refund back in the first place is that you’ve paid too much in taxes throughout the year. 

In the case of a major life event, such as marriage or divorce, the birth of a child, job loss or obtaining a second job, you might not have had time to fully adjust your withholding status via a Form W-4. In this case, it’s reasonable to expect a tax refund for that year. Adjusting your withholdings promptly can ensure that you’re not paying more than necessary to the IRS, putting more money in your pocket throughout the year. You can adjust your withholding based on your preference whether you want more money in your paycheck or a bigger refund at tax time.  TurboTax TaxCaster can help you figure out whether you can expect a refund at tax time or if you will have taxes due before the end of the year so that you can make tax moves to lower your taxes.  You can also use TurboTax W-4 calculator to help estimate your W-4 withholdings.

If you are eligible for refundable credits like Earned Income Tax Credit up to $6,935 for three or more kids in 2022 (and up to $7,430  for three or more kids in 2023) you may also see a boost in your refund since refundable credits give you the additional amount of credit beyond taxes you owe unlike non-refundable credits

According to the IRS latest statistics as of May 2022, the average refund  was close to $3,000, and the total amount of refunds was $292.542 billion. For many that’s the biggest paycheck of the year.  You can use TurboTax W-4 calculator or speak to a tax expert  to figure out how to properly adjust your withholdings so that you’re receiving the most out of your paycheck and you are estimating your withholdings correctly whether you want a refund at tax time or more in your paycheck.

What Happens If I Overpaid My Taxes? 

Overpaid Tax: Why It Matters to You

If you’ve overpaid your taxes, the IRS will issue  you a refund when you file your taxes for the year. 

If you prefer instead to get ahead on the next year’s taxes, you can opt to have the refund applied to your taxes for next year. This could be a great option if you’re expecting a tax penalty or have another situation, like starting your own business, where you might be unsure about the tax implications. 

If you’re frequently receiving a tax refund,  you may choose  to adjust your tax withholdings to receive more per paycheck from your employer. Note that receiving more per paycheck will likely result in less of a refund during tax time. Keeping in mind that the goal of tax time is to have a net of zero, where you don’t owe or to where you can receive a refund back. 

You might first want to use a tax withholding estimator like TurboTax free W-4 Withholding Calculator to estimate your appropriate income tax withholding. This will show you how your IRS refund and take-home pay are impacted, making the choice of your withholdings an informed one. 

To adjust your withholdings, you’ll need to complete a Form W-4. This form can be found on the IRS website or from your employer’s HR department. Complete this form per the instructions and return back to your employer; their payroll department will be able to make the necessary changes to your withholdings so that you are paying the appropriate amount for taxes. 

What If I Made a Mistake on My Taxes?

It’s possible that you notice a missed deduction or credit after filing your taxes that would have resulted in a tax refund. Don’t worry about missing deductions and credits when filing with TurboTax. TurboTax asks you simple questions about you and gives you the deductions and credits you are eligible for. You can also fully hand your taxes over to a TurboTax Live tax expert who can do your taxes from start to finish. If you do notice a mistake on your taxes, you can file an amended tax return with the IRS. 

What Is an Amended Tax Return? 

Overpaid Tax: Why It Matters to You

An amended tax return is a correction to a tax return that was previously filed. By filing an amended return Form 1040-X, you are potentially able to receive the money you overpaid due to a missed tax credit or tax deduction. In addition, if you notice that you’ve filed under the wrong filing status or listed an incorrect income, you can file an amended return to correct this information. 

How to Amend an Incorrect Tax Return

While the IRS might catch mathematical or general clerical errors on your tax returns, they cannot always catch every mistake, such as a change in filing status or income.  

If you’ve noticed that you need to correct an already-filed tax return, you’ll need to complete a Form 1040-X. 

To appropriately complete Form 1040-X, you’ll need:

  • A copy of the return that needs to be amended
  • Additional supporting documentation that will show necessary changes
  • Notices from the IRS that you may have received

Form 1040-X has three columns: 

  • Column A shows the initial numbers that you claimed on your original tax return
  • Column C shows the corrected numbers
  • Column B shows the difference between the two columns 

Form 1040-X also allows space for you to explain any changes, which is helpful to process the correction without delay. 

Amended federal returns are able to be electronically filed with TurboTax as long as you electronically filed the original return. You can file an amended tax year 2021 Form 1040-X withTurboTax by October 2022. If you filed your return with TurboTax, log into your account and select the tax return that you want to amend and follow the online instructions. If you filed with a TurboTax Live, a TurboTax Live tax expert can also walk you through amending your tax return.

How Long Do I Have to File an Amended Return for a Tax Refund or a Missed Credit?

Generally, you can file an amended return to receive a tax refund or credit you are eligible for, for up to three years after the date of your original filed return (as long as it was timely) or within two years after the date you paid taxes owed, whichever is later.

It’s important to note that if you file your amended return by the tax filing deadline in April, you will not be subject to interest or a penalty. If for any reason you must file after the tax deadline, attach a statement with your amended return form to ask specifically for an “abatement” of any penalty. 

How to Check the Status of an Amended Tax Return

Typically the IRS takes up to 16 weeks to process an amended tax turn. Due to current delays, it can take more than 20 weeks (up from the usual 16 weeks) to process amended tax returns. 

If you’ve mailed your amended return, it can  typically take the IRS three weeks from the date you mailed it to show in the system for review. While it can be frustrating to wait, it’s important to remember that filing another tax return or calling the IRS to check your status will only hinder the process.  

In the meantime, you can check your amended return status online after three weeks of submitting the amended return. To check this information, you’ll need your Social Security number, ZIP code and date of birth. You’ll receive a status of Received, Adjusted or Completed, indicating where in the process your amendment is. Once you’ve waited the length of time for processing, if you still have questions, you can call the IRS at 866-464-2050. 
Receiving a tax refund at tax time may be your preference instead of receiving more money in your paycheck.  If it is not your preference and you would rather have the additional money in your paycheck,  you can use TurboTax W-4 Withholding Calculator or consult with a TurboTax Live expert throughout the tax year to ensure your withholdings are correct, especially after a major life event.

Reduce your taxes with a
personalized tax plan

Our experts review your unique situation and recommend proven tax strategies to lower your tax bill.

By selecting Learn More,
you will be leaving Intuit’s site.

  • Previous Post

    Capital Gains Tax Explained (What Is It and How Much…


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *