Uncle Sam Needs Your Tax Payment Now
Today — Monday, April 15 — is the deadline to have tax filings postmarked. Post offices are staying open late just for the occasion. However, according to CNNMoney, at least 97 million taxpayers have already submitted their tax returns to the IRS this year.
Around 90 percent of tax returns filed already this year were done so electronically. It makes sense, as refunds take about three weeks or less to be processed for a tax return electronically filed. The bad news is that the average tax refund is about $40 less than it was last year–$2,755.
Taxpayers filing electronically should resist the urge to pay taxes owed with a credit card. According to Businessweek, the IRS charges between 1.88 and 2.35 percent to process a payment by credit card. Having the IRS deduct the taxes directly from a bank account is free. There is a flat fee of $2.99 to $3.95 charged when a debit card is used.
Why the big surcharges when paying taxes by credit card? Those surcharges have to be covered by someone. Merchants normally absorb them into their pricing. If everyone in the US paid their non-withheld income and estate taxes by credit card in 2012, the surcharge total would have come out to somewhere between $6.6 billion and $8.2 billion. That was more than half of the budget the IRS has proposed for 2013, according to CNNMoney…
One hiccup in receiving an owed tax refund is identity theft. When the IRS suspects it has happened, the wait to receive a tax refund can be pushed to 180 days, according to CNNMoney. Edward Karl, vice president of tax preparation at the American Institute of CPAs, said, “It’s unfortunate … but the IRS has to make sure they have the correct taxpayer and are protecting the correct taxpayer and protecting themselves.” The most obvious way for a taxpayer to determine if their identity has been stolen and used to file a false tax return is if they receive a notice from the IRS stating more than one tax return has been filed in their name.
Another hiccup that can delay a tax refund is an audit. Rounding to nearest thousands and exaggerated charitable donations and and deductions all raise red flags when the IRS reviews tax filings. Sometimes filing for an extension is the best option instead of rushing a tax return. Karl said, “It’s much better to do an extension and take a little bit more quiet time after April 15 to get it right.”