Saturday, October 29, 2016

Four Ways to Get a Faster Tax Refund in 2017

When it comes to getting your tax return as quickly as possible, there are two or three key pieces of advice that professionals typically offer year after year.

And then there’s the new ins and outs for the 2017 tax season.

For instance, few taxpayers realize that this year for the first time, no matter what you do or how you file, the IRS will be holding refunds that include the Earned Income Tax Credit or Additional Child Tax Credit until Feb 15.

The delay is tied to a 2015 law known as the Protecting Americans from Tax Hikes Act, which made several changes to the tax law and mandates that no credit or refund be made before Feb. 15 if the taxpayer claimed Earned Income Tax Credit or Additional Child Tax Credit on the return.

Yes, that’s a mouthful. But boiled down the takeaway here is that the change is aimed at giving the IRS additional time to review returns in order to prevent revenue loss tied to identity theft and refund fraud (which is often based on fabricated wages and withholdings).

While Feb. 15 may be long before some of us even think about filing, for others, who routinely get their returns in early, this may come as a bit of a surprise.

“People claiming the Earned Income Tax credit or Advanced Child Tax Credit are typically the population that files first and they tend to look for that refund within three to five days,” says Nina Tross, executive director of the National Society of Tax Professionals. “They would fully expect to have their refund by the end of January, but that’s not going to happen this year.”

One other development taxpayers should keep in mind this year is that the IRS is on heightened alert across the board for refund fraud, says Tross, which means there will be increased security protocols tied to filing and accessing previous returns.

“Refund fraud is the number one priority,” continues Tross. “It’s getting a lot of attention, so they are going to be looking at returns more closely.”

For the general public, the heightened security will involve such things as being required to provide a cell phone number in order to access tax returns from prior years, ensuring that you’re able to receive a text message and answer security questions.

“Fraud has become global, coming from Russia, Bulgaria, Romania… places where we have no presence,” Tross explains. “All we can do is stop it here and that effort involves having to provide additional identity verification.”

The takeaway for this one is to be prepared when filing and have all your key information available.

Here’s a handful of additional advice for streamlining the tax return process and getting your refund as quickly as possible.

File Early

This may seem like a no-brainer, but the professionals say many people still don’t realize the impact early filing can have.

“The reason behind this is that there are less returns being processed, so the earlier you get the return in, the quicker you get it back,” says Tracie Miller-Nobles, a CPA and member of the AICPA Financial Literacy Commission.

Make Sure All Information is Correct

Yes, this is another seemingly basic step, but it too can be cause for countless delayed refunds.

Take the time to review such things as your name, Social Security number, and bank routing number carefully. If you got married or divorced in the last year, double check that your name is updated, particularly if you’re e-filing.

“If you’re using tax preparation software, the software defaults to whatever the taxpayer’s last name is. So for people who have recently changed or blended names and are not paying attention that can cause an error. Make sure to correct for that,” says Tross. “In terms of the bank routing information, people seem to have the feeling that the bank verifies this stuff and that’s not the case.”

File Electronically

There are numerous ways available to file electronically these days. Those whose adjusted gross income is $62,000 or less annually may want to use the Free File software options provided by the IRS. There are many well known companies and software options available through this program, including TaxSlayer, Jackson Hewitt, and H&R Block’s Free File.

In addition, for a fee, there are countless commercial online tax preparation services and software.

Why is filing electronically a key part of getting that tax refund quick? The answer is it expedites the entire process.

“Electronic filing really helps in processing the returns,” continues Miller-Nobles. “Most certified public accountants are now required to e-file returns for clients. It speeds up the process of getting the return faster.”

Opt for Direct Deposit of Your Refund

This option may not be for everyone, particularly those who don’t have a bank account, but it’s one of the best ways to speed things up and get a fast tax refund.

“There’s a lot of reasons why this is beneficial,” says Miller-Nobles. “It gets the money into your account faster and you don’t have to worry about the post office losing the check.”

Taxpayers without a bank account may want to look into establishing an Individual Development Account. A valuable tool for low-income families, IDAs are savings accounts that in many cases are able receive a direct deposit.

If none of those options are available, Miller-Nobles has one last piece of advice.

“If the taxpayer doesn’t have a bank account and direct deposit isn’t available, then we really urge them to file early in that situation, and make sure that the refund checks are sent to a secure location,” she says.

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The post Four Ways to Get a Faster Tax Refund in 2017 appeared first on The Simple Dollar.


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