J. William Seabrooke CPA P.C.

If you provided either your Federal or State government with an “interest free loan” in 2010, it may be time to submit your claim for your income tax refund.  However, there are some important tips and facts that you should know before you file your 2010 tax returns:

1. Consider e-filing your tax returns -  It will soon become mandatory.  Get on board now.   If you paper-file there will be a delay in the time that your tax return reaches the taxing authorities while it is in the U.S. Postal System.  After it arrives and is sorted, your tax return data will probably be manually keyed in to the IRS system by a seasonal employee and your refund check will be mailed to you six to eight weeks after your tax returns were received.  Add three to seven more days in-transit time while your check  is in the U.S. Postal System and it could be almost nine to ten weeks before your refund check arrives in your mailbox.
2. Consider using the direct deposit alternative for your tax refunds –  it’s fast, and easy.  Enter your bank name, routing number, and full account number in the appropriate blocks for your paper tax return or tax software (recommended).  If you file your tax return electronically your tax refund will normally be issued within three weeks after you receive an “Accepted” acknowledgement notification from the IRS.  These times will vary with State tax returns.  Ther IRS publishes a refund cycle every year.  Click on this link for the 2011 tax refund cycle information in Publication 2043. 
3. Revise your Federal and State tax withholding – depending on your tax bracket and total income, an annual income tax refund of  $200-$500 may be acceptable to you to avoid underpayment penalties and interest.  However, if your annual income tax refund is many times this amount, contact your payroll department or revise the amounts for your quarterly estimated tax deposits, or adjust a combination of both factors.
4. Tax withholding planning tip – if you owe the U.S. Treasury taxes from prior years, an active installment payment plan, partial satisfaction of a tax levy etc the IRS will probably apply your income tax refund to these outstanding balances before determining if any amounts are actually due to you.  A similar practice may be followed by your State taxing authorities.  Read tax planning tip #3 above again!!!  You may need to cancel your reservations for that trip down to St. Barts! (more…)