How are YOU Spending YOUR Refund?

Since tax seasons is almost over, I've been wondering what my readers are using their refunds on... Did you get a state or federal return? What are you doing with it? Are you following my advice regarding the rule of thirds, or are you using all of your refund as a down payment on a house.

Whatever you are doing with your refund, I want to know!

Let me know about your refund via Twitter or Facebook. I'll be responding to all messages, and retreating messages about refunds. I'm hoping to put together an article for my blog on what my friends are using their refunds on, and if your message is selected then I'll send you a link to watch my documentary, Death or Taxes online for free!

We're Getting a $54,000 Tax Refund!

Good news to start the week off!

Due to changes in federal tax law, David and Thelma Ward are going to receive a massive tax refund for adopting children over the past five years.

CNN.com reports:

The Wards couldn't believe the news when their tax preparer called to tell them they're getting a $54,000 refund this year.

Thelma Ward was speechless. She had to hand the phone to her husband so she could dance around the living room floor in shock.

"I was thanking God like never before," she said. "We're just overwhelmed -- that amount was so huge it was unbelievable."

Even their tax preparer said she had to check the math -- 10 to 15 times.

In the past few years, the Wards have expanded their already big clan of seven children by adopting five new kids. For each of these adopted children, they are eligible for a one-time tax credit of up to $13,170.

Continue reading at CNN.com…

Reasons to Spend Your Tax Refund

As if anyone needs another excuse to spend their tax refunds! According to financial expert, John Strelecky, using a refund to splurge is a good way to create happiness. Just make sure this falls in line with your life and financial goals…

From USNews.com:

He says that after you consider today’s average returns and inflation rates, people are better off using their refund money to enjoy life today, instead of saving it for some vague future purpose. “The point of earning money is to create memories, have amazing experiences, and do interesting things,” he says. “Don’t wait until age 65 to start spending your money to live a rewarding life.”

He makes a good point. As you weigh potential splurges, recent research suggests that spending on experiences, such as a family vacation, could bring more happiness than material purchases, such as a new washing machine.

By comparing consumption data from the national Health and Retirement Study, Thomas DeLeire of the University of Wisconsin-Madison and Ariel Kalil of the University of Chicago found that spending money on leisure activities, which include vacations, movie theater tickets, and hobbies, improve happiness levels. (Happiness was measured by asking respondents to describe how they felt about their lives.) Expenditures on durable goods such as refrigerators, clothes, personal items, and housing, on the other hand, did not have an effect on happiness.

The apparent reason behind the leisure spending—happiness connection is even more intriguing than the finding itself: Spending on leisure activities appears to boost one’s level of social connectedness. That makes sense, since when you go on vacation, engage in a hobby such as tennis or bridge, or go out to the movies, you are almost always doing it with somebody else. So spending on leisure might boost your social connectedness, which in turn improves your happiness level.

Read more here

Use Your Tax Refund Wisely, Consider the Rule of Thirds

Every year I get asked the same question by taxpayers everywhere: what should I do with my tax refund? Although every person's financial situation is different, I usually suggest the rule of thirds. Devote a third to your past, a third to your present and a third to your future. What does that mean? Devote equal portions of your refund to paying off debt (that’s the past), buying something you’ve been wanting or needing now (present) and to saving (that’s the future).

1/3 into Savings

If you are getting a refund directly deposited into your bank account, immediately move a third of it into your saving, then forget about it. Don’t delay! The longer those funds languish in checking, the higher the probability you’ll spend the money.

Consider high interest savings

To make the most of your refund, consider a high interest savings account. There are rules about minimum deposits, and how often you can withdraw money from the account, so make sure you know the rules before opening any new accounts.

Compare interest rates

If a high interest account won’t work for you, any savings vehicle will do. Just make sure you compare interest rates. A few internet searches and phone calls can make a big difference in the rate of return on your savings.

1/3 Toward Debt

Paying down debt is always a good idea and a great use for your tax refund! Typically I would recommend paying off credit cards, but if you do not have that much credit card debt then you could use the funds to pay off student loans, car loans, etc.

Pay off cards with highest interest rates first

Before you make any extra payments, be sure to look through your most recent statements to find out which cards are charging you the highest interest rates. It is always a good idea to pay off higher interest debts first!

1/3 for Fun!

Now, with the final third of your tax refund, I give you permission to go out and have fun! Celebrate paying off a little debt, and putting money into your savings account by spending some money on whatever you want. Just remember to limit your purchases to 1/3 of your tax return and not a penny more.

Think about hidden benefits of your "fun money"

There are plenty of financial moves you can make that are both fun, and smart. For instance, you might want to put the money towards a down payment on a house. Owning your own home is certainly fulfilling, and is also a tax savvy purchase because your mortgage interest may be tax deductible.

Support your local economy

If you want to avoid the guilt of feeling like you wasted a third of your refund, spend it supporting your local economy. That way you can spend the money on something fun, while knowing that you helped promote economic growth in your hometown.

Other Considerations

If you received a sizable refund (and I consider anything over $200 to be “sizeable”) from the IRS this year, you need to think about adjusting your withholding. Yes, that big check feels good, but you are waiting all year to get back money that was yours in the first place. The average tax refund is now over $3,000. That means you could have had $250 more in your pocket each month last year. Don’t wait to get your hands on your own money, adjust your withholding and use the money wisely.

IRS Has $1.1 Billion for People Who Have Not Filed a 2007 Income Tax Return

Did you miss the 2007 tax filing season? You better get on it, time is running out!

The latest from the IRS newsroom:

Refunds totaling more than $1.1 billion may be waiting for nearly 1.1 million people who did not file a federal income tax return for 2007, the Internal Revenue Service announced today. However, to collect the money, a return for 2007 must be filed with the IRS no later than Monday, April 18, 2011.

The IRS estimates that half of these potential 2007 refunds are $640 or more.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2007 returns, the window closes on April 18, 2011. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2007 refund that their checks will be held if they have not filed tax returns for 2008 and 2009. In addition, the refund will be applied to any amounts still owed to the IRS, and may be used to offset unpaid child support or past due federal debts such as student loans.

For more information check out IRS.gov

Average Tax Refund in 2010: $3,003

According to new figures, the average taxpayer received a refund of $3,000 last year, which is up 5% from the previous year. Overall the IRS gave out $328 billion in refunds. Remember, that is YOUR money! Adjust your withholdings and enjoy that money all year long.

CNN reports:

The jump was one of the biggest in years, thanks in part to several tax credits introduced as part of the American Recovery and Reinvestment Act.

The Homebuyer Tax Credit -- which gave buyers up to $8,000 for purchasing a home -- was expanded to include more taxpayers.

Meanwhile, the refundable American Opportunity Credit helped more students and parents pay for college tuition and course materials. It temporarily replaced the $700 non-refundable Hope Credit and gave students with income of $80,000 or less a credit of up to $2,500 a year.

(The Making Work Pay credit was part of the ARRA as well, but it didn't show up in refunds. Instead, it was distributed in paychecks.)

Refunds also likely received a boost from the sluggish unemployment picture, said Roberton Williams, a senior fellow at the Tax Policy Center.

Read more here

7 Steps to an Early Tax Refund

Tax season is closer than you think, so to get your tax refund back as quickly as possible, you need to get on the ball. I know, you’re all wrapped up in the holidays, but by starting your tax season chore list now, you’ll be ready to file and get your refund fast. Where do you start? MSN Money put together 7 steps to take in order to get your tax refund early. I have included a few of the items below, but click here for the full list.

1. Get started

The first step is the hardest. Stop thinking about it and get moving. Until you actually start your return, you'll never finish it. And that's probably going to slow down your refund.

If you don't have all your numbers, just put your name and address on the form. It will get you in the mindset to move forward.

Your first step is to break the inertia. As my father used to say, a trip of a thousand miles begins with a traffic jam. Break that jam and get moving.

2. Accumulate the data

January is collection month. By the second week of February, you should have the numbers in hand. Make sure you've gotten W-2s and any statements from your brokers and banks. You'll receive 1099 forms for any interest, dividends and stock sales.

Your mortgage company will send you a Form 1098 for any interest and real-estate taxes paid. Get those statements together and review the numbers. They're not always right. They won't include any interest you paid at the very end of December because the creditor won't have received the money until 2011.

3. Put the numbers in IRS categories

Neither the Internal Revenue Service nor your CPA is going to add up those numbers for you. Well, maybe your CPA. Many years ago, a psychiatrist near Philadelphia paid me $150 an hour to open his mail because he couldn't be bothered.

Continue reading at MSN.com...

IRS Agent Accused of Stealing Tax Refunds

According to new reports, an IRS revenue officer has been charged by the U.S. Attorney's office for stealing unclaimed tax refunds. Fern Stephens allegedly took over $160,000 from the government agency over the past year. For an agency as unpopular as the IRS, this is not the best PR they’ve ever had.

If convicted of all counts of mail fraud, theft of government funds, and unlawful access of a government computer, Stephens faces a maximum sentence of 35 years in prison.

In one instance the U.S. Attorney's office accuses Stephens of duping $3,340 from a Manhattan-based bankrupt company by claiming that the principal of the business asked for the money by the IRS and then pocketing it herself.

Stephens also allegedly took advantage of her position in the IRS to put in fake tax refund requests and transfers in an IRS computer system so the money would go right back to her or relatives and friends.

Read more at NBC New York.com...

IRS Seeks to Return $164.6 Million in Undelivered Checks to Taxpayers

In their newest press release, the IRS announced that they have $164.6 million in undeliverable tax refund checks. There are over 100,000 taxpayers that are due a refund, and the IRS is encouraging taxpayers to check the "Where's My Refund" section of their site to see if they are owed a check. If only the IRS were so dedicated to finding taxpayers to whom they owe money, as when the taxpayer has a debt, eh?

“We want to make sure taxpayers get the money owed to them,” said IRS Commissioner Doug Shulman. “If you think you are missing a refund, the sooner you update your address information, the quicker you can get your money.”

A taxpayer only needs to update his or her address once for the IRS to send out all checks due. Undelivered refund checks average $1,471 this year, compared to $1,148 last year. Some taxpayers are due more than one check.

The average dollar amount for returned refunds rose by just over 28 percent this year, possibly due to recent changes in tax law which introduced new credits or expanded existing credits, such as the Earned Income Tax Credit.

If a refund check is returned to the IRS as undelivered, taxpayers can generally update their addresses with the “ Where’s My Refund?” tool on IRS.gov. The tool also enables taxpayers to check the status of their refunds. A taxpayer must submit his or her Social Security number, filing status and amount of refund shown on their 2009 return. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

Continue reading at IRS.gov...

Latest Good Reads

The value of networking – beyond the quota

Instead of my tax refund all I got was this piece of paper...

Democrats touting tax cuts

Gross income from finding things

It's a balancing act... Time versus money

Refund Anticipation Loan Alternatives

A few weeks ago I posted a blog entry regarding the IRS’s announcement that they would suspend the availability of the debt indicator next tax season. This indicator was used to identify whether an individual taxpayer would need to have a portion of their refund withheld because of unpaid taxes or other debts, such as unpaid child support or delinquent federally funded student loans.

However, the indicator also enabled tax companies to issue refund anticipation loans (RALs). These refund advances have come under fire over the past few years, because of excessive fees, and some unethical tax preparation offices that target low income taxpayers. Without the debt indicator, tax preparers will not be able to offer RALs.

Since RALs will no longer be available to taxpayers I decided to put together the following list of alternatives. By planning ahead you can prevent yourself from getting into a situation next April where you need extra money in a rush.

File Early

You can file your tax return as soon as tax season begins mid January. If you need your refunds quickly, then you should try to file as early as possible – while making sure you have all the proper documentation. As you get closer to the deadline IRS offices become swamped and it will take longer for them to process your return, and issue a refund. If you need your return quickly, then you should file as early as possible.

E-File your Return

Stop wasting time with paper returns, if you do not already e-file your tax return, then I highly recommend doing so this upcoming tax season. You will get your refund almost as fast as you would with a RAL, but without paying a penny in interest. According to the IRS, paper filers can expect to wait eight to ten weeks for a refund. E-filers, on the other hand, will receive their refunds in only a couple of weeks. Additionally, the likelihood of an error is significantly reduced when you e-file.

Direct Deposit

It is also a good idea to have your refund deposited directly into your bank account. Even if you do not e-file your return, you should still consider opting for direct deposit. When the IRS issues a check, it can take weeks to reach your mailbox. However, when you have the refund direct deposited it will show up in your bank account in as few as ten days.

Visit a Free Tax Preparation Office

If you are worried you might not be able to pay to have your tax return prepared without a RAL, you should consider visiting one of the IRS’s free tax return preparation sites offered by the Volunteer Income Tax Assistance Program (VITA) and the Tax Counseling for the Elderly (TCE) Program. In order to be eligible for the free service, you will need to meet certain income requirements. For more information visit this page on IRS.gov.

Payday Loans

Just in case you do find yourself in a situation where you have no other option, you can always consider a payday advance loan. In order to qualify for an advance you will usually only need a steady job, and proof of income. However, you should always use extreme caution with payday loans, as they are notorious for very high fees and interest rates.

Ex-Football Player Jailed for Punching His Accountant

From WebCPA.com:

Florida Circuit Court Judge John Brown sentenced the 57-year-old former NFL player to 11 months and 29 days in jail on Monday and ordered him to attend anger management classes, according to the Northwest Florida Daily News.

Bruner was found guilty of felony battery in August, but was acquitted of retaliating against a witness. His accountant, Wayne Montgomery, accused him of striking him several times during a meeting at Bruner’s home in July of last year. Bruner was upset that Montgomery hadn’t been able to do more to help him get a larger refund from the IRS, and he accused Montgomery of working for the accounting firm Carr, Riggs and Ingram, which Bruner had sued. Bruner is the former owner of an amusement attraction called Big Kahuna’s water park.

Montgomery testified that Bruner first waved a fake gun and yelled at another man who was present at the meeting. After the other man walked out of the room, Bruner took out his aggressions on his CPA, punching him in the eye, pushing him face down onto a recliner, and then punching him repeatedly in the head, neck and back.

Montgomery said that Bruner later called him in January at 4:38 in the morning and threatened him, “Battery, battery, battery. You just think battery. That was not battery. You ain’t seen battery. Next whipping I’m giving you real battery. I’m going to destroy you and your property in Alabama and Tennessee.”

Affordable Care Act Provides Expanded Tax Benefit to Health Professionals Working in Underserved Areas

Here is some good news for health care professionals who received student loan relief under certain state programs that reward those who work in under-served communities. If this is you, the IRS has announced you may now qualify to receive a special tax break.

The Affordable Care Act went into effect last year (2009); it expands the tax exclusion received by health professionals under loan repayment and forgiveness programs. Prior to this new law, only amounts received under the National Health Service Corps Loan Repayment Program or certain state loan repayment programs eligible under the Public Health Service Act qualified for a tax exclusion.

Basically, the Affordable Care Act expands the prior tax exclusion to include any state loan repayment or loan forgiveness programs that were created to increase the availability of health care services in under-served areas or in “health professional shortage areas” and the Act makes this exclusion retroactive to the 2009 tax year.

If you are a health care professional serving in one of these areas or participating in these programs and have reported income from repaid or forgiven loan amounts on their 2009 returns (possibly after receiving a Form W-2, Wage and Tax Statement, or Form 1099a) you may be due a refund.

Here’s some additional information released by the IRS:

• Those who believe they qualify for this relief may want to consult their state loan program offices to determine whether the program is covered by the new law.
• Health care professionals who have not yet filed for 2009 need not report eligible loan repayment or forgiveness amounts when they file. Those who have already filed may exclude eligible amounts by filing Form 1040X, Amended U.S. Individual Income Tax Return. This form can be downloaded from this website. Individuals filing Form 1040X to claim this exclusion should write “Excluded student loan amount under 2010 Health Care Act” in the Explanation of Changes box.
• Health care professionals may request an employer or other issuer to provide a Form W-2c, Corrected Wage and Tax Statement, or 1099 and may attach the corrected form to the Form 1040X. However, the Amended Tax Return Form 1040X may also be filed without attaching a corrected W-2 form.

How to Avoid Giving Uncle Sam a Free Loan

From Market Watch.com:

With April 15 behind you, it's time to breathe a sigh of relief. But if you got a tax refund this year, consider making changes now to avoid giving the government an interest-free loan until next April.

Organizing your finances so that you get no refund and owe nothing when you file your return is the ideal touted by some financial planners. Managing your taxes is not easy.

Still, by adjusting your withholding now you can at least reduce your refund.

"There are lots of people who say any refund is too big because they don't want the government to have their money and not [pay] interest on it," said Diane Winland, certified public accountant and certified financial planner at Financial Finesse Inc.

Winland said she isn't a fan of writing checks to the Internal Revenue Service, but "I actually like to owe a little."

You can choose to have less in taxes deducted from each paycheck, and instead take that money and put it to work for you by investing or saving it.

Few Will Use Tax Refund to Indulge: Poll

A new poll done by Bankrate.com and Princeton Survey Research Associates International has found that fewer Americans will go shopping with their tax refunds this year. According to the study (via MSNBC.com) an estimated 84% of U.S. taxpayers intend to pay bills, eliminate debt, or buy essential items with their refunds.

Only 7 percent plan to fritter the money away on a shopping spree or vacation.

On the other hand, 40 percent of those who believe they owe taxes say they are not prepared to pay up. Nevertheless, only 6 percent plan to borrow money, though 17 percent say they intend to set up an installment plan with the IRS.

And six in 10 people (63 percent) will pay their taxes with funds straight from their bank accounts.

ankrate commissioned Princeton Survey Research Associates International to gauge Americans' feelings about the looming tax deadline and whether or not they're prepared to pay the taxman.

Overall, 30 percent of Americans intend to pay down debt with their tax refund, 28 percent say they will save or invest it, and 26 percent have earmarked those funds for necessities such as food or utility bills.

Continue reading at MSNBC.com…

Want a Bigger Tax Refund? Don’t Itemize

Although itemizing can lead to a huge refund for some taxpayers, there are many others who benefit more from taking the standard deduction. If you think you may be one of those taxpayers that will get more for their buck by simply taking the standard deduction, read this Forbes.com article.

Year after year taxpayers spend hours hunting down and organizing all their receipts and canceled checks for totally legitimate deductions--gifts to charity, medical expenses, unreimbursed business expenses and so on. Then they're told by their tax professionals, (or discover while using software such as Intuit's TurboTax or H&R Block's At Home) that all their conscientious record keeping is for naught. Those itemized deductions won't be showing up on their tax returns, because they'll get a bigger refund by claiming the "standard deduction."

Often people are left feeling a little cheated and confused by the process. So it helps to understand why you may be better off not itemizing, particularly this year. Here are six reasons:

1. The standard deduction isn't so small or so standard.

The standard deduction is an amount assigned to each filing status. The base amount for 2009 is $5,700 for a single filer and double that--$11,400--for a married couple filing jointly. A head of household (a single parent with kids, for example) gets a standard deduction of $8,350. There are additions to these standard amounts for those who are blind or over age 65.

Continue reading at Forbes.com…

Some States Delaying Tax Refund Payments

From CBS News.com:

Some states suffering severe, recession-induced budget problems are holding off on paying tax refunds to individuals and businesses. North Carolina, Hawaii and Alabama are already doing it and others, such as New York and Kansas, might.

The states are holding or may hold onto your money as long as they can because they need to use it for other purposes, tax expert and attorney Barbara Weltman told "Early Show" Saturday Edition" co-anchor Chris Wragge.

You'll eventually get your refund, but when depends on where you live, she explained. Laws differ from state-to-state, but most states have to issue a check (or direct deposit) within 45 days from April 15 or the date the return was filed, whichever is later. So, if you filed your return in February, the refund isn't due until 45 days after April 15. Some states have even longer — up to 90 days — to issue the refunds without having to pay interest.

Weltman says she sees this becoming a long-term problem because, even if the economy recovers, many states will have huge leftover budget gaps. "I think the best strategy for tax payers is to avoid the need to get a refund — which is really just an interest-free loan you've made to the government," she observed.

10 Tax Friendly Ways to Spend your Refund

According to the IRS the average tax refund last year was over $2,500. I always encourage taxpayers to do something smart with this money, and it is never too early to begin planning for next tax season. If you use your refund in one of the following ten ways, then you can get a head start on lowering your 2010 tax liability.

1. Put the Funds into a Traditional IRA

When you file your tax return you have the option to have your refund split between up to three different accounts. You can even have funds electronically transferred to a tax friendly traditional IRA. You can use these contributions to lower your adjusted gross income for the year.

2. Purchase Inflation-Adjusted Savings Bonds

In addition to transferring funds to a retirement account, the IRS has recently began allowing taxpayers to use a portion of their refund to buy inflated adjusted saving bonds, commonly referred to as I Bonds. The government makes this process easy, all you have to do is fill out IRS Form 8888 and designate how much of your refund you want to invest in I Bonds. They are exempt from state and local taxes, and federal taxes are deferred until you redeem the bond.

3. Use the Money for a Down Payment on a House

We all know there are multiple tax advantages of homeownership. You can write off mortgage interest, deduct property taxes, and many homebuyers qualify for IRS credits of up to $8,000. If your refund is large enough, you could use it as a down payment on a house. If you do qualify for a new homebuyer credit then you can even use the funds to help cover your closing costs.

4. Make Energy Efficient Upgrades to your Home

If you already own your home then you might want to consider making energy efficient upgrades to your house. In addition to increasing the value of your property, many upgrades qualify for tax incentives. To find out the exact amounts, check out EnergyStar.gov.

5. Make a Donation to a Qualified Charity

You can easily donate a portion of your tax refund to a qualified charity to directly reduce your adjusted gross income. Even if you cannot afford to make a large monetary contribution all miles driven to, from and during volunteer work are deductible expenses, as well as any goods or supplies you purchased while volunteering.

6. Invest in Yourself

Instead of investing your money into a retirement account you could invest in yourself and take a class at a local university. Depending on your income level the American Opportunity Tax Credit could cover the cost of up to the first $2,500 in qualifying tuition and related expenses.

7. Buy a Qualifying Hybrid

Although popular cars such as the Toyota Prius no longer qualify for the Alternative Motor Vehicle Credit, there are plenty of vehicles that do—Including the Ford Fusion Hybrid, which qualifies for a $3,400 credit.

8. Open a 529 College Savings Fund

Contributing to a 529 College Savings Plan is another smart use for your IRS refund. Similarly to a Roth IRA, you do not have to pay taxes on the interest that accumulates in the account.

9. Buy New Office Computers or Equipment

If you are self-employed or own a small business then you can use your refund to purchase new office computers, furniture, equipment, or just about anything else that qualifies as a business expense. Just be sure to save all of your receipts!

10. Purchase a Health Insurance Plan

Those of you who are self-employed taxpayers can also take a deduction for your health insurance expenses. I recommend purchasing your plan now so that you can use your refund to pay for a majority of the yearly premium, which will lower your monthly payments.

The IRS Has $1.3 Billion for People Who Have Not Filed a 2006 Tax Return

The Internal Revenue Service announced that 1.4 million people did not file a federal income tax return for 2006. Now, when a taxpayer is entitled to a refund but does not file a tax return, that taxpayer will not be issued their refund—this is called an unclaimed refund. Unclaimed refunds total more than $1.3 billion for the tax year 2006! If you did not file a 2006 tax refund and think you have a refund due, you must file your 2006 return with the IRS no later than Thursday, April 15, 2010.
The IRS estimates the average unclaimed refund for tax-year 2006 is about $604.
There are various reasons taxpayers decide not to file a tax return, some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. $604 is a good reason to file your 2006 tax return. Here’s the bottom line: taxpayers only have three years to file a tax return to claim a refund; after the three years have passed, money that should have been yours, becomes property of the U.S. Treasury. For 2006 returns, this three year window closes on April 15, 2010. Though back-year tax returns cannot be filed electronically, taxpayers can still speed up their refunds by choosing to have them deposited directly into a checking or savings account. If you need help getting back tax years filed hire a tax professional.

Questions for the Tax Lady: February 22nd, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: How long does it take to get a refund from the IRS?

If you e-file and use the direct deposit option then you could receive your refund within three weeks. However, if you went the paper route it could take upwards of eight weeks. If you want to know exactly when to expect your money, you can track your refund on the IRS's Where's My Refund page.

Question #2: What is the statute of limitations on Federal income taxes owed?

Generally speaking, the IRS statute of limitations is 10 years. However, there are a number of ways the IRS can get past this limit. According to IRS.gov “the IRS generally must collect the tax owed within 10 years after the assessment of the tax. Depending on the taxpayer, the assessment of tax may be the date a taxpayer files a tax return with a balance owing or the date the IRS files a tax return on behalf of a non-filer taxpayer. Thus, the statute of limitations will begin once the tax liability has been ‘assessed’ by the IRS.”

“Although the IRS generally has just 10 years to collect on an outstanding tax liability, there are certain events or transactions that may extend or suspend the statute from expiring. Various laws affect the statue of limitations expiration date. For example, if a taxpayer files bankruptcy or files an Offer in Compromise, the statute of limitations is generally suspended during the time the bankruptcy or Offer in Compromise is under review. Also, additional assessments of tax owing may extend the amount of time that the IRS is allowed to collect. Therefore, if the IRS is going to collect taxes owed, they must do so within the time frame permitted by law.”