Help the IRS debunk a handful of taxpayer misconceptions for this filing season.
It’s probably not surprising that the inner workings of the way tax returns are turned into tax refunds are opaque to most taxpayers – it’s a complicated process, after all.
In the absence of knowledge, however, many taxpayers substitute guesses, rumors, wishful thinking and worse, buying into a set of myths that end up having to be debunked almost every year – whether by IRS staff, or by paid tax preparers who have to explain why the taxpayer was misled by what their cousin heard from that guy at the gym.
Here is a set of particularly pernicious myths that the IRS has singled out to help clear the air.
1. Where the ??!!? is my money?!
The first myth is that all refunds are delayed. The IRS issues more than nine out of 10 refunds in less than 21 days; eight in 10 taxpayers get their refunds faster by using e-file and direct deposit. Some refunds may be delayed “for a variety of reasons” (see the next item). Tell clients that good things come to those who wait without bugging their preparer.
2. The clock’s ticking until Feb. 15
The second myth is that refunds claiming the Earned Income Tax Credit or the Additional Child Tax Credit will be paid on February 15. The truth is that the IRS is not allowed by law to issue them before mid-month – but that doesn’t mean they’ll go out bang on the 15th. The IRS expects the earliest EITC/ACTC-related refunds to appear in taxpayer accounts starting Feb. 27 if these taxpayers chose direct deposit and no other issues crop up with their return.
3. When’s my refund?
Third, there is no, repeat no, secret shortcut through a tax transcript to get a refund date. Taxpayers can order a transcript to validate past income and filing status for mortgage, student and small business loan applications, but it won’t tell them when they’re going to get their refund. They should use “Where’s My Refund?” for that.
4. Dial M for myth
Fourth, it’s amazing how many clients think that talking to the IRS or calling a preparer is the best way to find out when they’ll get their refund. In what the IRS calls “reality,” the best way to check the status of a refund is online through “Where’s My Refund?” or via the IRS2Go mobile app. The IRS updates the status of refunds once a day, usually overnight. “Where’s My Refund?” also has the same info as IRS telephone assistors (even though no doubt the latter are just sitting lonely and waiting for calls).
Finally, the biggest, most dangerous myth – the one you can’t hammer at enough – is that the IRS is contacting taxpayers by e-mail, texts or social media to request personal or financial information, or worse, that the IRS is on the phone RIGHT NOW demanding payment using a specific method, threats to summon the cops, demands for payment without appeal or inquiries about credit or debit card numbers.
The IRS NEVER initiates contact over the phone, never threatens to bring in the local police, or ask for credit or debit card numbers over the phone.
So tell clients to rest easy -- at least until they open their mail … .
Wolters Kluwer Tax & Accounting and Thomson Reuters Checkpoint have released their predictions for the expected annual inflation adjustments from the Internal Revenue Service for various tax-related items.