SafeAmerica Credit Union

tax refund

• By Lisa

Tax Return Delays Likely, Here’s What To Do This Tax Season

Tax season is fast approaching! The pandemic has affected production on a multitude of levels and has taught us to be prepared for any delays whether it be shopping in person or even online. The Internal Revenue Service has shared it is faced with backlogs of up to 6 million in unprocessed individual returns. This tax season could very well have delays we are not in favor with. To help alleviate the burdens of the IRS and improve our chances of receiving our returns in a decent time frame, the IRS strongly suggests you do the following:

Use Free Online Resources Provided By The IRS

Filing taxes always brings a myriad of questions; questions we never know who to direct to, but the IRS. For this year’s tax season the IRS has shared, instead of calling in with your questions, you can visit the IRS’ Volunteer Income Tax Assistance (VITA) and/or Tax Counseling for the Elderly (TCE). Both programs are managed by the IRS and staffed with IRS-certified volunteers, who must take and pass tax law training which meets or exceeds IRS standards. To learn more and find a location near you, click here.

File Your Taxes Electronically This Year

The IRS strongly suggests taxpayers file their tax return electronically along with their direct deposit information as soon as all their tax documents have been made available. Tax payers should also check on the accuracy of all their information. Filing a tax return with errors or one that is incomplete may add to the overall delay of receiving your tax return. For the latest IRS forms and instructions, you can visit the IRS website at IRS.gov/forms.

Expect To Receive IRS Letters This Tax Season

People receiving these letters should keep them. Do not throw them away. These letters can help taxpayers, or their tax professional prepare their 2021 federal tax return.

Letter 6419 - Advance Child Tax Credit Payments

Did you know the Child Tax Credits were actually advanced payments on your 2021 taxes? The tax credit was temporarily expanded from $2,000 to $3,600 and the government began to pay half of the available credit via monthly payments from July through December. Those who opted out of advance payments will be receiving full refund amounts.

Each individual, even those who file jointly, should have received letter 6419, 2021 Advance Child Tax Credit. The IRS began sending Letter 6419 via the United States Postal Service back in December 2021 and has continued into the month of January. This letter contains information such as the total Advance Child Tax Credit amount as well as the number of qualifying children used to calculate the overall amount. Anyone who did not receive any payments listed is instructed to call the IRS before filing a return.

Letter 6475 - Economic Impact Payment

Letter 6475, Third Economic Impact Payment (Stimulus Money) was also issued out to individuals who received a third payment in 2021, in late January. This letter is needed to provide verification to the IRS that the taxpayer received the money.

What if I never received Letter 6419 or Letter 6475?

As mentioned above, to ensure you receive your refund, you will need the information on both letters. If you are missing either letter you can use the child tax credits portal to verify the information you need.

You always have the option to call the IRS at 1-800-829-1040, but remember, delays are imminent and strongly suggested you complete all your tax needs, electronically.

For more important IRS information, you can click here.

Tips To Make Filing Easier

  • Gather all your 2021 tax records, Individual Tax Payer Identification Numbers, Adoption Taxpayer Identification Numbers, and this year’s Identity.
  • Set up or log in securely at IRS.gov/account to access personal account tax information including balance, payments, and tax records including adjusted gross income.
  • Individuals can use a bank account, prepaid debit card or mobile app to use direct deposit and will need to provide routing and account numbers.

Key Filing Dates

Below are important dates taxpayers should be aware of this season:

April 18 — Due date to file 2021 tax return or to request an extension and pay tax owed due to Emancipation Day holiday in Washington, D.C., even for those who live outside the area.

April 19 — Due date to file 2021 tax returns or request extension and pay tax owed for those who live in MA or ME due to Patriot’s Day holiday.

When it's time to file your return, remember that filing your taxes electronically and including your direct deposit information would result in the quickest possible return.

SafeAmerica Credit Union Members Save

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The information in this article is for general educational purposes only and not intended to provide specific advice or recommendations. Please discuss your particular circumstances with an appropriate professional before taking action.

• By Lisa

Ten Great Ways to Spend an Income Tax Refund

Expecting a substantial income tax refund this year? If so, you are in the majority; over 80 percent of Americans get money back at the end of the tax year, with the average refund being close to $2,900. Rather than having those precious dollars being absorbed into your normal spending routine, get the most out of your cash.

  • Pay down high interest loans and lines of credit. With average annual interest rates for credit cards and personal loans hovering around fifteen percent, paying off that credit card before making other investment decisions makes good sense.
  • Fund Your Retirement Account. If you haven’t invested in a retirement account, seriously consider making a contribution to a retirement account right away.
  • Invest it. Instead of just working for money, let money work for you. If you invested one lump sum of $1,500 in the stock market, over thirty years, assuming a 12 percent return, you’d have $ 53,924! (Of course, do your research first before making any investment decisions and talk to licensed investment professionals)
  • Open an emergency account. Most Americans don’t have money set aside for those financial emergencies that always seem to happen when there is no cash in the coffer. A large tax refund is a great start for an emergency account. Experts recommend that it should eventually total between three to six months’ worth of essential living expenses.
  • Pay for repairs. Maintaining expensive possessions now will result in dollars saved tomorrow. Use the money to repair that leaky roof before it develops into a bigger problem; replace those dangerous bald tires with new, safe ones.
Woman paiting
  • Start a personal endowment. Investing in your emotional, physical, intellectual, and career growth is a wise use of money. Whether it’s paying for a gym membership or a cooking class, you’ll feel effects of this type of investment fast.
  • Make an extra home mortgage payment (or two). Though you won’t feel the benefit immediately, doubling up on a mortgage payment now can save you months of mortgage payments later.
  • Donate to a charity. Giving back to the community is a wonderful way of supporting a cause that you are passionate about. Even better – in many cases at least a portion of your donation is tax-deductible too.
  • Open a College Savings Plan for your child. A four-year, out-of-state college education can cost over $100,000. Save for your child’s college education with a college saving plan. For the most part, withdrawals are completely tax-free when used for higher education purposes. Talk to a licensed investment professional about your different options.
  • Plan a vacation. If you are in a fluid financial position, and can truly afford a bit of luxury, do something you’ve been dreaming of. Money is to be enjoyed as well as earned, saved, and invested. Go ahead. Book that cruise!

Although all the preceding ideas are excellent uses for a lump-sum amount of cash, remember that instead of planning for a refund, it could be more beneficial to come out even. A tax refund is an interest-free loan to the government, and money that is not in your pocket every month. If you have been getting a refund back each year, consider changing your withholding exemptions so less tax is withheld from each paycheck. While a tax refund may feel like a gift from Uncle Sam, it’s not—it’s money that you have overpaid on your income taxes. That said, some people use this as a form of saving.

 

*This publication is only intended to be used for general informational purposes. Consult a tax professional for the most current data and/or personal advice.

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