February 5, 2013
Income tax refunds: issues affecting timing and size
As tax season gets underway, concerns about possible delays in tax refunds remain. One reasons for this is the late date of the fiscal-cliff deal, which caused the IRS to delay until last week the date when it will begin processing tax returns.
But the concerns about refund delays go beyond the late state to the season. They also include the effect of additional computer checks that the IRS has instituted in efforts to detect tax refund fraud. Tax fraud involving identity theft has been a major problem in recent months.
Aside from delays, however, there is also another important question for each taxpayer who gets a tax refund. How large will the refund be?
Naturally, the tax planning considerations that affect refunds will vary somewhat for each taxpayer. Still, there are certain strategies that can apply to many taxpayers in seeking to maximize their refunds.
For starters, consider your approach to state taxes when claiming your federal tax deductions. Are you better off deducting you state sales tax or your state income tax on your federal return? Taxpayers get to choose the option that works best for them.
In state like Texas that does not have an income tax, the choice is clear. It makes sense to take advantage of this chance to write off your state sales taxes on your federal return.
It’s also worth making sure you count up all of your contributions to charity. Make sure to include not only the big gifts, but the small ones as well.
Source: “Three Simple Ways to Get a Bigger Tax Refund,” CNBC, Sharon Epperson, 1-25-13