I’ve been asked time and time again about tax refunds, how long does it take for the tax agencies to issue them, is a tax refund income, how can I make sure I end up getting a refund instead of having to pay in each year. Today I will discuss these questions.
How long does it take to get a refund? The answer is “it depends.” What determines how long it takes? A lot to things from the time of year you send it in, to the workload of the tax agency amongst other factors. What can you do if you haven’t received your federal income tax refund and it’s been more than 6 weeks? Simple, go to https://www.irs.gov/refunds and you can track the status of your refund. If your refund request is not for the current tax year you will have tocall in and I suggest you do so early in the morning, preferably as soon as they open their call in lines.
How can you make sure you end up getting a refund each year instead of having to pay in? Again, the answer is “it depends.” Conventional wisdom dictate that lowering your exemptions on your W9 would insure that the maximum amount of withholdings is taken out of your paycheck each week. However, the question really is do you owe the tax in the first place? In order to determine that you must first ask yourself a few question: 1. Do you live in Washington DC. 2. Do you work for the federal government. 3. Is your money derived from a federal source. 4. Did you participate in any federal programs in the tax year in question. 5. Did the money you earned in any given year come from a Washington DC based corporation. If the answer to all of these questions is no the chances are you do not owe federal income tax.
Is a tax refund income? The short answer is no. Tax refunds from either federal or state sources are not taxable income because they’ve already been taxed and the refund is a repayment of your overpaying on taxes. However, as I stated above the chances are if you’re in the private sector that you don’t owe any taxes that all.