Tax season is often a time of significant uncertainty for people who do not have a thorough understanding of the tax code. Refunds are a substantial source of revenue for most taxpayers each year, so feeling a sense of unease about tax concerns is understandable. Making a mistake when filing your taxes can lead to penalties and the loss of important rights.
The goal of the IRS is to collect as much money as possible from taxpayers, so you should not rely on the IRS to correct mistakes that you make when filing your taxes. Avoiding some of the most common tax myths will set you on a path to maximizing your refund and staying clear of tax problems.
Refunds Are Delayed
People who rely on their tax refund for paying bills or buying necessities often fear that their refund will be delayed. The reality is that, in almost all cases, your refund will be issued with no delay. The IRS only holds refunds when it finds compelling evidence that your tax return could be fraudulent. Minor mistakes made when filing ordinary tax returns that do not contain red flags for fraud, such as huge deductions or employment income that does not match your W-2s, will not lead to problems with your refund being delayed.
The IRS almost always addresses discrepancies in your tax return after issuing your refund. When the IRS disputes a line item in your tax return and demands that you pay more, you can carry forward extra amounts that you owe into future years in most cases. The IRS, therefore, has no incentive to not issue your refund within the ordinary window of 21 days after receiving your tax return. If you claimed the earned income tax credit or the additional child tax credit, keep in mind that Feb. 27, 2018, is the earliest date you can receive your refund under federal law.
The IRS Will Contact You About Your Refund
Communicating with the IRS is difficult due to a wide range of laws that make it expensive for the IRS to provide responsive customer service. The IRS is, furthermore, projected to receive 238 million tax returns in 2018, so reaching out to every taxpayer is infeasible. To find out about the status of your refund, you have to take the initiative to contact the IRS on your own. You should, however, be careful when contacting the IRS since anything you say could be used against you in court.
In general, the risks and costs associated with contacting the IRS exceed the value of knowing the status of your tax refund. If you derive most of your income from employment, the odds of experiencing a tax issue that will delay your refund are very low. When a tax problem does arise, however, the IRS will never contact you by phone. Instead, the IRS will send an official letter to your house about the matter in question. If you get a call from a person claiming to be an agent of the IRS, hang up and dial the agent’s extension using the main IRS phone line to avoid the possibility of becoming a victim of identity theft.
Call the IRS If You Have Questions
When you call the IRS, you will first be transferred to an automated menu that directs you to the right department. By choosing the refund line, you will be sent to an automated system that can tell you the status of your refund. Finding out more detailed information about your tax return requires you to speak with an IRS representative. If you need to speak to the IRS directly, make sure that you prepare your questions in advance, so you do not make a mistake during the conversation. The IRS will not answer legal questions for you, so third parties must be relied upon for answering most tax questions.
A tax professional can help you ask the right questions when calling the IRS about your tax return without incurring any legal liabilities. You have the legal right to contact the IRS about any matter on your own, but you have to be careful about what you say during the conversation. If the agent you are speaking to asks you a question about your tax return, you are not required to provide an answer.
In general, you should work with your own accountant or attorney for tax matters because the job of an IRS agent is to work against your interests to collect money for the federal government.
Extensions Cause Audits
The federal tax code gives you the legal right to file for a tax extension if you need more time to prepare your tax forms. You will not increase your risk of being subjected to an audit when you take advantage of your right to receive an extension by following the right procedures. You have the automatic right to receive a six-month extension when you submit Form 4868 before the filing deadline.
You should also keep in mind that you will not incur any penalties when you file for an extension using the legal process established in the tax code. If you fail to file for an extension, however, you could face penalties of five percent for each month that passes after the filing deadline. Overall, filing for an extension is a legitimate action that reduces your risk of experiencing an audit by showing the IRS that you are making a deliberate effort to comply with the law.