Five Ways to Speed Up Your Tax Refund
Why let Uncle Sam hold on to your tax refund any longer than necessary? Avoiding a few common pitfalls while preparing your return can mean the difference between waiting about two weeks for your refund instead of months.
The average dollar amount of this year's refund is slightly higher than in 2007, according to CCH, a tax information provider. Refunds for tax returns filed as of Feb. 22, 2008 averaged $2,700 -- 2% higher than last year's average $2,650 refund. Overall, the government is benefiting from an interest-free loan of more than $106 billion so far this year, according to CCH.
That's all the more reason to get your refund as quickly as possibly.
Here are a few tips from the pros on avoiding delays:
1. File ElectronicallyAmericans are catching on to the benefits of filing electronically, according to David Bergstein, CPA, a CCH tax analyst. Taxpayers have filed more than 38 million tax returns electronically so far this tax year, compared to 36 million this time in 2007. The greatest growth in e-filing is from individuals using home computers, he says. Relying on snail mail can be just as much of a mistake during the electronic era as adding incorrectly, says Mark Steber, vice president of tax resources for Jackson Hewitt Tax Service (JTX) in Parsippany, N.J. "It's more accurate and there are many safeguards built into the e-filing process," he says. For example, the electronic process easily identifies when an incorrect social security number accompanies a person's name -- a feature that could prevent income information from being attributed to the wrong person. Taxpayers also receive immediate verification that the IRS has received the return. Refunds can arrive as quickly as within eight to 10 days, he says. But the process can take between four and six weeks when filing a paper return -- assuming that it's correct. Steber says he once lacked confidence in the electronic filing system, but changed his mind about five years ago, when his paper return ultimately arrived late because of insufficient postage. "I was one stamp short," he recalls.
2. Include the Correct Social Security Numbers
Errors involving Social Security numbers, which are now easily identified by e-filing, may slow the processing of your return. "You certainly want to file electronically to speed up your refund -- but with the correct information," says Charles Barragato, a New York-based CPA and director of the School of Professional Accountancy at Long Island University in Brookville, N.Y. Women who change their surnames upon marriage without notifying the Social Security Administration are likely to encounter problems, he says. The solution is to either to obtain a social security number under the new married name -- a process that can take at least four to six weeks -- or to refile under the maiden name and correct the information with the Social Security Administration after tax season, he says.
3. Choose Direct Deposit
Taxpayers who combine direct deposit with e-filing can receive their refund, on average, in less than two weeks, according to CCH. Direct-deposit requests are up 5% to date this year over the same time last year, it says. Taxpayers using direct deposit may also split their refund into as many as three different accounts, including an IRA account for a 2008 distribution.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.