Finance expert Erika Kullberg recommends using tax refund money to first fill up emergency savings, then tackle debt using the debt avalanche method, which helped her pay off $200,000 in debt. She advises having 6-9 months' worth of living expenses in an emergency fund and prioritizing paying off debt with the highest interest rates first. If emergency savings and debt are taken care of, she suggests putting the refund toward financial goals rather than splurging.
Inflation spikes, causing concern for the Federal Reserve and impacting stock market, while former President Trump faces a $350 million fine, Ford's CEO takes a tough stance with UAW, and taxpayers anticipate smaller refunds. JetBlue shares soar after a vote of confidence from Carl Icahn, and Ben Affleck's Dunkin' Super Bowl ad proves successful.
A W-2 employee in California reduced his federal taxes by 98% for a tax refund by utilizing real estate strategies, including bonus depreciation, to deduct elements of his investment properties. By qualifying as a real-estate professional through his spouse's status and utilizing the short-term rental tax loophole, he significantly reduced their taxable income, resulting in a minimal federal tax liability. He now teaches others how to achieve similar deductions and emphasizes the importance of long-term property ownership to avoid potential tax recapture.
Many Americans eagerly await their tax refund, but some argue that it's better to withhold less and have more money in each paycheck for expenses or saving and investing. Others believe that having the government hold the money helps people save more. The decision depends on individual comfort and financial goals. While getting a big tax refund can be beneficial for paying down debt or saving, adjusting withholding using the IRS' tax withholding estimator and W-4 form can help manage refunds and ensure paycheck deductions are on track.
Taxpayers claiming the child tax credit or earned income tax credit may experience delays in receiving their refunds, with most additional child tax credit-related refunds expected to be available in bank accounts or on debit cards by Feb. 27 if taxpayers choose direct deposit and there are no other issues with their tax return. The IRS cannot issue refunds involving the additional child tax credit before mid-February due to the need to prevent fraudulent refunds, and taxpayers can check their personalized refund date using the Where's My Refund? tool.
Taxpayers claiming additional credits like the child tax credit and the earned income tax credit may experience delays in receiving their refunds, with most additional child tax credit-related refunds expected to be available in bank accounts or on debit cards by Feb. 27 if taxpayers choose direct deposit and there are no other issues with their tax return. The IRS cannot issue refunds involving the additional child tax credit before mid-February due to the need to prevent fraudulent refunds, and taxpayers can check their personalized refund date using the Where's My Refund? tool.
Taxpayers who filed their returns on January 29 can expect their refund within 21 days if filed online with no errors and using direct deposit, with a latest arrival date of February 27, 2024. Factors such as errors, incomplete information, or choosing paper check over direct deposit may cause delays. The "Where’s My Refund?" tool on the IRS website or IRS2Go app can provide real-time updates on refund status.
Tax season has officially started, with the IRS accepting and processing 2023 tax returns. The deadline to file taxes is April 15, with exceptions for certain states and disaster areas. Taxpayers can apply for an individual tax extension using Form 4868, but filing for an extension does not delay tax payments. To receive a tax refund quickly, file electronically and request direct deposit. Taxpayers can track their refund status using the IRS' tool. The IRS has delayed a controversial tax reporting requirement for online payment apps like Venmo and PayPal until 2024.
The IRS has adjusted tax brackets and standard deductions for 2024 to account for inflation, potentially leading to larger tax refunds for many Americans, with some expecting up to a 10% increase compared to last year. Middle- and lower-income workers who didn't keep pace with inflation are most likely to see higher refunds, while homeowners who tapped into expanded home energy tax credits and low-income families with children may also benefit. However, Social Security beneficiaries may face higher taxes, as the threshold for paying taxes on Social Security remains unchanged. Taxpayers can file their returns starting January 29, with most refunds expected within 21 days, but some returns may take longer to review.
Tax professionals recommend filing taxes early in 2023 to potentially receive a refund sooner. Last year, the average tax refund was $2,753, down from the previous year due to waning pandemic benefits. However, inflation adjustments may increase refunds this year. Adjustments include higher income thresholds for tax brackets, increased standard deductions, and higher contribution limits for 401(k) and IRAs. Filing early also helps protect personal information, allows time for accurate returns, and provides an opportunity to prepare finances if money is owed. Tax preparation can begin as soon as all necessary tax information is received, and tax preparers can queue filings for automatic submission when the IRS opens tax season.
Over 700,000 Michigan households will receive tax credit checks averaging $550 in February 2024 as part of the state's Working Families Tax Credit, which was increased to match the federal Earned Income Tax Credit. The expansion applies retroactively to 2022, and eligible individuals will receive a check to make up the difference between the original 6% credit and the new 30% rate. The governor stated that the tax credit directly benefits half of Michigan's children and can be used for bills, food, and school supplies.
The IRS has issued a warning about a new tax refund scam targeting taxpayers through a deceptive letter. The letter, disguised as an official IRS notice, asks recipients to provide personal information such as driver's license images, cellphone number, bank routing information, Social Security number, and bank account type. The IRS advises people to be cautious of red flags, such as awkwardly-worded requests and inaccurate tax return deadlines. The agency emphasizes that it never initiates contact via email, text, or social media, and urges taxpayers to report phishing scams to the appropriate authorities.
The Ritz-Carlton Dove Mountain Resort in Arizona lost a lawsuit in which it sought a refund on state taxes paid for Marriott award nights that members redeemed. The hotel argued that points redeemed are a reimbursement, not new taxable revenue. However, the court ruled that the Arizona transaction privilege tax is a tax on gross receipts, and reimbursement by Bonvoy to the hotel for nights that members stay on points is new revenue. The hotel pays 4.5% of room revenue to Bonvoy, and members redeem those points for free stays, which the court concluded is taxable gross revenue.
The average tax refund check issued by the IRS this year is about 11% lower than last year, with no extra tax credits or pandemic-related stimulus payments delivered by the federal government in 2022. This decrease in refund size can be concerning to millions of Americans who depend on the influx of money from Uncle Sam to make major purchases, save for retirement or pay off debt. Taxpayers typically receive a refund if they had too much money withheld and overpaid their taxes the previous year.
