Posted on May 21, 2010June 12, 2016 by Jan Roberg

Where’s My Tax Refund?

After you file your tax return, you should have your refund within 21 days. Often, it’s faster than that, but not always. Here’s how to check on your refund.

First step: the quickest and easiest way to check on your refund is through the IRS website. Go to www.irs.gov and click on the “Where’s My Refund?” icon. You will need your social security number, your filing status (single, head of household, etc.), and the exact dollar amount that your refund is supposed to be for. You must have that information to get any kind of an answer.

From there, you’ll know whether or not your refund has already been sent, is still being processed, or if there’s something else holding up your money. A common example of that would be if you owed back child support and the state stepped in to take your federal refund to cover it. If you owe more than what your refund is for, then you won’t be seeing any of that tax money. If you refund is for more than the amount of the debt, you will eventually get the remaining balance, but it will take several weeks before you see it.

Let’s say that you don’t have an outstanding debt, and the IRS site says that you’ve already received your refund. Then what do you do? First, check to see if it was direct deposited into you account. That happens to be quite common. Be sure to check your bank statements before you ask the IRS to put a tracer on your refund. Yes, that sounds like a “duh” sort of statement, but you’d be surprised how many people can’t seem to see that they’ve already gotten their refunds in their account.

If you did not have direct deposit but were expecting a check, the IRS can put a tracer on it. They can tell you where it was mailed to, if it was cashed, etc. They can even reissue the check if it was lost (after a specified period of time and some paperwork.)

One thing the IRS can’t help you with is a Refund Anticipation Loan (RAL) or Refund Anticipation Check (RAC). Let’s say you had your taxes done at a place that offers you a “bank product”, either they give you a loan against your tax refund or they take their tax prep fees out of your refund. Instead of getting your money directly from the IRS, you’re actually getting it through a third party-usually a bank that has an agreement with the tax company. If your refund is to be direct deposited into your bank account, then everything should be fine. There’s usually a two or three day delay between when the IRS says they issued the refund and when you actually get it from a service like this.

Sadly, many people who use that type of service don’t have bank accounts, and they pick up their checks directly from the tax company. If you had your taxes prepared on April 15th and expected to receive one of those checks, you could have been in for a rude awakening when you went to get your refund check on the 17th and found the tax office to be closed. In fairness, your big national companies will have an office open someplace,and someone there should be able to find your check for you. It just might take some hunting to find the right person to help.

Then, there are those companies that just completely shut down. That’s a little scarier. (Okay, a lot scarier.) Even though your tax preparer completely disappeared, all is still not lost, because he had to work with a bank in order to process your refund. A little detective work through your papers should get you a name and phone number of the bank processing the refund and connect you with your money. To be honest, it’s an agonizing process-computerized answering machines, being on hold for ages, “that’s not my department” answers, etc. You have to be pretty persistent, but you will eventually get your money.

In general, it’s best to put as few layers between you and your refund as possible, and you’ll be less likely to be hunting down your refund long after it’s due.

Posted on May 17, 2010June 12, 2016 by Jan Roberg

Garage Sales and the IRS

Updated June 2016.

While a robin may be the first sign of spring, to me a garage sale is the first sign of summer. Garage sales are full of so much promise. Whether it be the hope of some extra cash or the fantasy of a clean basement, garage sales have a happy, summery feel to them.

And tax-wise, they’re almost never counted as taxable income. That makes them double good in my book. Let’s face it, everything you’re selling at your garage sale is going at a loss. Really. That baby stroller you paid $90 for but are trying to sell for $15-it’s a loss. The $50 pair of jeans that looked so good 20 pounds ago that you’re trying to sell for $10–loss. Since you can’t claim personal losses on your tax return, it doesn’t even get reported.

{Okay, tax technicality: if you sold those items for more than you paid for them, then you should be reporting the sales and claiming the profit as taxable income. But seriously, nobody in my neighborhood is making a profit on their old junk.}

So why am I even writing about garage sales in a tax column? Because after your sale, you pack everything left over into a package for the Goodwill, right? Of course! Otherwise your basement will be a mess again. So here’s my point, when you do that, write down what you packed up and list the prices you put on everything. That way, you’ll have a list of your donations which you’re going to need at tax time.

Too busy right now? Just take a few pictures with your digital camera. Then you’ll be able to look at them when you really need that list for your 2010 tax return. Trust me, come next February, you’re not going to remember what you sent to the Goodwill in May.

So now you’ve got a triple good: non-taxable income, a clean basement, and a tax deduction all rolled into one summertime event. How can anybody not like a garage sale?

Posted on May 7, 2010July 24, 2016 by Jan Roberg

Avoiding an Audit

Everybody wants to avoid getting audited by the IRS.

Updated July 2016

Every year people ask me, “What can I do to prevent being audited by the IRS?” The honest answer is, “Absolutely nothing.” Because in fact, everyone is audited every year. You just don’t know it. Every year, your tax return is run through a computerized audit. First there is the search for missing documents—such as an unfiled W2 form or interest statement. This is called the document matching program.

What I’m saying is that every year, your tax return is getting audited by a computer. You just don’t know because you don’t hear anything from the IRS unless there’s a problem.

Now it used to be that when a return got tagged by the computer, a human being would take a look at it. A return that got snagged by the computer might still not be audited if it made sense to the human. If the human still had a question, then an audit letter went out. Nowadays, there isn’t much human verification, so a lot more letters get sent for returns that normally wouldn’t seem to be a problem. That’s why you don’t just want to automatically pay the IRS if you get a letter – there’s been no double check, you might not really owe.

Even people who don’t file tax returns are audited. The IRS runs the documents about your income even if you don’t file a return. If they determine that you’ve earned enough income to file, and you owe them money, rest assured, you’ll get a letter about it. If the IRS figures you should be receiving a refund – rest assured, you won’t hear a thing!

Another audit device the IRS uses is called the DIF score, it’s a process where the IRS basically checks “what’s normal” for expenses for taxpayers in various income brackets. The IRS tracks data for all sorts of things, if your “DIF” score is out of line for your profession, that’s also likely to trigger an audit.

Now I bet you’re wondering, “How do I get my hands on those DIF scores Jan mentioned so that I can keep my return from being pulled for audit?” Yeah, I’d like a copy of those too. Unfortunately, the IRS doesn’t publish them. That would be like showing your hand in a poker game. Every tax preparer in the country would like to know how those DIF scores are arrived at.

In the meantime, your best defense for an audit is hanging on to your records. Now that tax season is over, make sure that you’ve put all those papers someplace safe. Hopefully, you won’t need them.

Posted on March 10, 2010June 11, 2016 by Jan Roberg

Unclaimed IRS Refunds

The IRS won't tell you they owe you money.

If you want the IRS to give you a refund, you’ve got to file a tax return.

Updated June 11, 2016.

One thing you might not know about the IRS is that if you don’t file a tax return, they prepare one for you— whether you ask them to or not. Surprised? Well you shouldn’t be. They take the information documents that they’re sent, like your W2s, and then they compute your taxes using the worst possible filing status. If it comes out showing that you owe, then you’ll get a letter telling you to pay up.

But what happens if they find out that you should be getting a refund? Well, nothing. They don’t send you a letter saying, “Dear Sir: Even though you’re too lazy to file your income taxes yourself, we’ve done them for you and we want to send you a big, fat refund!”

Right now, the IRS has data showing that there is close to $1 billion of unclaimed income tax refunds out there. If you’ve got a refund coming, and you don’t file your return within three years of the due date, you lose out on that money forever!
But why bother? How much money are we talking about for one person? Of the people who have refunds coming across the nation, the median refund is estimated to be $718. But that’s based upon the IRS doing your taxes. You could, in fact, be owed much more.

For example: let’s say you are a divorced mother with two school-aged children and a mortgage. When the IRS does your return, they compute your taxes based upon you being single, taking a standard deduction, and having no children. In a case like this, that $718 refund could be worth over $4,000!

So how do you know if you’ve got money coming? You know what they say, you can’t win if you don’t play. Same with taxes, you can’t get a refund if you don’t file!