IRS Refund Guidelines That Can Assist You in Tax Preparation

For most Americans, the tax season is one of the most stressful times of the year as individuals as well as businesses rush to get their paperwork in order and file their tax returns on time. From collecting the necessary documents, to filling out the required forms, to finally completing the process, the entire timeline needs to closely follow the guidelines set by the IRS.

For most taxpayers, tax refunds are more often than not the biggest single amount of money they receive in a calendar year, with average refunds over the past few years running up to $3000. Therefore, by following IRS refund guidelines closely, not only can you accurately file taxes for your clients or yourself, but also help them recover as much money as is legally possible in the form of tax refunds.

IRS Refund Guidelines for Tax Preparation

According to the official statistics provided by the IRS, 9 out of 10 refunds are generally processed within 21 days. At the same time, the year 2018 promises to be a little different and refunds might take longer than usual to arrive owing to some changes in a federal law, namely "Protecting Americans from Tax Hikes Act of 2015". Therefore, it is always best to keep these points in mind while submitting documents for your IRS refund this year.

1. Help your Clients Receive Their Refunds Fast by Filing Accurate Tax Returns

   One of the best ways of filing for tax returns according to IRS refund information center is to proceed via e-filing. This method can be combined with direct deposits in order to ensure that the taxpayers receive the refund on time. Some of the steps to ensure this is correctly done include -

   • Submit the tax return electronically
   • Make sure the return is completely accurate and error-free
   • Ensure the taxpayer's social security number is displayed correctly, as well as the details of their spouse and children
   • Ensure a correct mailing address is also provided, in case the refund has to be sent via check
   • Provide the correct bank account details and the routing number if your client is going for direct deposit

2. Always Use Direct Deposit if Possible

   IRS refund guidelines emphatically urge users to use direct deposits in case of refunds. Not only is this method one of the safest and fastest ways of receiving refunds, but also is preferred by the majority of Americans (8 out of 10). For direct deposits, all you need to provide is your bank account number and the routing number. In fact, using form 8888, you can ensure that your tax refunds can be directly deposited in up to 3 accounts.

   At the same time, tax preparers cannot take advantage of form 8888 to collect fees as it is meant solely for the refunds to be deposited without any issues.

3. Do Not Forget to Claim Additional Child Tax Credit and Earned Income Tax Credit

   In cases where you need to file for ACTC or EITC, do remember that you can file for their returns as well as soon as the tax filing season begins. However, the directives of the PATH Act of 2015 direct the IRS to hold on to the refunds for both EITC and ACTC until February 15. Therefore, it is good business to let you clients know that even if they file these returns early, they would not be able to receive the refund before that particular date.

   Also, even though the IRS starts issuing such refunds after February 15, most people do not see the balance reflect in their accounts till at least the week of February 27, barring any privacy issues.

4. Direct Your Clients to "Where's My Refund" for Any Inquiries

   The IRS has a very useful feature in the form of "Where's My Refund", which allows everyone to receive personalized refund information based on the way their tax return is being processed. Taxpayers can either visit the IRS.gov website, or the IRS2go app to see this information.

   People are free to check the status of their returns after 24 hours of filing (electronic filing) or 4 weeks in case they have mailed their tax returns. The "Where's My Refund" tracker displays 3 different stages of an individual's tax returns, namely -

   • Reception of the tax return documents
   • Refund approved
   • Refund sent

   In order to track their returns through these means, the taxpayer has to furnish his/her SSN, current filing status, and the exact whole amount of the refund in question. If provided correctly, this tracker shows a personalized date within which the taxpayer would receive the refund. This feature is updated on a daily basis, every 24 hours, and is extremely useful when trying to receive the latest information about the IRS refund in question.

5. Ensure Your Clients Know That Some Refunds Could Take Longer to Process

   Although, as specified previously, the IRS tries to issue refunds in as short a time period as possible, but in certain cases tax returns could take much longer to process. Such a condition can arise from different conditions, such as an error in the tax return, or when an application needs further review. This is especially true when a claim for ACTC or EITC is involved, wherein identity theft or fraud is a common occurrence.

6. Apply for a Tax Extension Only If Necessary

   Under certain conditions, you might not be able to file taxes immediately on behalf of your clients. In such cases, a tax extension can help them escape from heavy penalties later on. A tax extension should always be filed before the original due date, i.e. April 15 for standard income tax. Also, use this method only if required, and always make sure your clients know that filing for an extension in tax returns does not give them any additional time to pay the taxes they owe. So if your clients owe taxes, in that case, they cannot file for an extension.

   The IRS also never asked applicants for the reason of an extension, but at the same time, it should be used only sparingly.

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