Tax season is fraught with difficulties in most years, and 2022 (and beyond) is no exception.
As a result of this year’s tax law revisions and other complexity, many Americans may find it difficult to file their taxes independently. It’s a good idea to start with the most fundamental aspects of taxation, such as how much you owe and why. Is there a difference between a tax refund and a tax return?
If the whole tax return vs. tax refund ordeal confuses you, don’t worry. We’ve got your back. Keep on reading for our full breakdown of everything you need to know about a tax return and a tax refund.
What Is a Tax Return?
A tax return is a document you submit to the Internal Revenue Service (IRS) each year to report your taxable income, spending, and other financial details. While your W-2 statement gives most of the information you need for filing your taxes, there may also be a 1099 or other forms for registering your income.
If you’re self-employed, you’ll also need to know your gross income (different from your AGI). You’ll also need to know how much you’ve already paid in taxes (either via withholding from your employer or estimated taxes that you pre-paid) and other pertinent information to complete your tax return.
Deductions for your children, interest on student loans, health insurance, Roth IRA contributions, office expenditures, company expenses, and charitable donations are all included on your tax return.
To get a refund, you must complete a tax return. Tax returns don’t guarantee a refund simply because you submitted one.
Understanding Tax Refund
If you paid too much in taxes in the previous year, you’d get a tax refund from the US Treasury. For example, if your employer withheld more money from your paycheck than was necessary, or if you’re self-employed, you may have accidentally paid more in anticipated quarterly taxes than you should have.
The difference between what you paid and what you owe on your tax return will be reimbursed to you in one single amount by the government. You might also expect to earn more money if you claim deductions on your taxes. Check your refund status with the IRS by following these steps.
You’ll find out whether you’re receiving a refund once you submit your taxes.
Tax Return vs. Tax Refund: How Will I Find Out if I’m Getting a Tax Refund?
Using tax preparation software or a tax filing service, you may get an idea of how much money you’ll get back after your tax return is submitted (including if you self-prepare).
When the IRS receives and approves your tax return, you will send your final refund amount to you via email or text message. The money is on its way to you, either in your bank account or a letter in the mail.
Tracking your refund is possible from the moment you submit your taxes until you get your reimbursement. It may take up to three weeks for your refund to arrive. If your tax return rejected, then you can reach out to tax specialists like those at the Silver Tax group.
What About Unfiled Tax Returns and Their Refunds?
As a result of their low income, some taxpayers eligible for a refund do not submit their tax forms.
The IRS urges people who qualify for the Earned Income Tax Credit and other tax benefits due a refund to submit their taxes. Refunds on these returns are often still available even if you submit them more than three years after the original due date has passed.
The interactive tool supplied by the IRS may be used by taxpayers who have their W4s indicating the amount of federal tax that has been withheld from their paychecks.
When You Owe Taxes
Fear of owing the IRS money they cannot pay in full makes some taxpayers reluctant to submit a tax return. As a result of penalties and interest, you might end up paying even more money if you don’t submit your return.
Bankruptcy may allow you to get rid of old income taxes. It implies that you no longer owe them, and the IRS or Minnesota Department of Revenue cannot and will not collect any more. Using the services of a tax resolution attorney, you may be able to negotiate a lower tax payment with the Internal Revenue Service (IRS).
Dischargeable bankruptcy usually allows you to discharge your income taxes if you submitted your taxes yourself and on time three years before the filing deadline. They are not dischargeable in bankruptcy if filed by the IRS or the Minnesota Department of Revenue.
If you want to seek bankruptcy relief in the United States and you owe back taxes, keep in mind the following stipulations.
A CP3219N Notice of Deficiency may be issued if the IRS files a replacement return on your behalf. However, you have the option of appealing this judgment on your own. You may want to get the help of an attorney with previous expertise in handling similar matters.
You should nearly always file your taxes yourself if you haven’t done it in several years. There are fewer fines and more deductions and exclusions to minimize the amount of tax you must pay as a result.
Tax Return Guide: Simplifying Tax Season
As they say in Texas, you can’t escape death or taxes. So, instead of dreading it, we hope that our guide has shed some light on the tax return vs. tax refund nuances and helped you get a clearer idea about how they both fit together.
However, financial literacy isn’t built in a day. It would help if you headed to our finance section, where we have many guides and explainers that will aid you on your financial journey and help you with your financial health.
