Your Tax Refund
When it comes to taxes, the first question we are often asked at Jackson Hewitt is, “Will I get a tax refund?” For the majority of our clients, that answer is YES! This good news leads almost immediately to the next question, “How quickly can I get my refund?”
For millions of Americans, your tax refund is the biggest paycheck you’ll receive all year! This means filing your taxes is the most important financial transaction. After 34 tax seasons, our Tax Preparers have some tips on what to do to get the maximum refund you deserve, and to get money early.
Tax Refund Timing
According to the IRS, most refunds are funded within 21 days of filing. This clock starts after the IRS begins processing tax returns for the year. However, this year new provisions included in the Protecting Americans from Tax Hikes Act (or PATH Act) impact certain tax return’s refund timing. For tax returns that contain the Earned Income Tax Credit (EITC) and/or the Additional Child Tax Credit (ACTC), those refunds will begin being funded the week of February 27, 2017. Also, the refund status for those clients may not be available on the IRS.gov website until Feb 15.
What is the PATH Act?
The PATH Act was passed into law in December of 2015 with a number of consumer benefits. It includes $620 billion in tax reductions for families and businesses, extending specific tax provisions, and includes elements designed to protect Americans against identity theft and tax fraud. This new law requires issuers of W2s and 1099-MISC and 1099-Rs to submit forms to the Social Security Administration by January 31 each year. It also gives the IRS more time to review returns with specific tax credits, like EITC and ACTC, and to compare W2 forms from employers against the individual tax return.
Refund Identity Theft
The PATH Act includes provisions to help combat identity theft and protect your tax refund. Last year, identity thieves affected 10 million taxpayers, stealing tax refund dollars from hardworking Americans. The IRS initiated a Security Summit last year to combat SIRF. Along with the new laws, the IRS will exercise new security measures to protect Americans.
Will Your Refund Be Delayed?
In the end, how quickly you receive your tax refund depends on when you file your taxes, how you choose to file, and, now, what credits and deductions you might claim. While refunds including EITC and CTC/ACTC will be funded no earlier than February 15, you will benefit by filing early. You are giving the IRS plenty of time to review your return, verify your EITC and CTC/ACTC eligibility, and W2 authenticity, which is required before your return is in processed. Additionally, filing with a tax professional that efiles, rather than submits a paper return by mail, will also save you time.
Tax Credits, Deductions, and Getting Your Biggest Refund
One of the first elements to getting your biggest refund is making sure you don’t miss any tax credits or deductions. If your circumstances have changed from last year, there may be a number of new credits or tax deductions available to you. Because you may not know that you’re eligible, a Tax Advisor can help you make sure you don’t leave any money on the table. Visit ourTax Refund Calculator to get your estimate.
Life Changes and Your Tax Refund
Tax credits and deductions are often connected to major life circumstances, so they may change from year to year based on your personal changes. For example, moving for a job, getting married, having a baby, or retiring could all have an impact on your taxes. Don’t miss out on some of these common overlooked areas.
- Deductions or credits for Students: If you are a student, or have one on your tax return, you may qualify for credits or deductions for the tuition and fees paid or for a deduction of the student loan interest paid.
- Single parents should look at their filing status. They may be missing out by not filing Head of Household.
- Nearing 60? Look at your IRA deductions. There are increases to contributions creating tax savings and increasing your retirement funds and you don’t want to miss.
- Caregivers, like many of us with aging parents, may be missing out on claiming a dependent exemption, dependent care credit, and medical deductions based on the cost of caring for our parents when they can’t care for themselves.
The $6,269 Check One in Five Taxpayers May Miss
The Earned Income Tax Credit (EITC / EIC) is a federal tax credit that has been available for the last 36 years and helps millions of families each year. It was created to help hard working Americans, and qualification is based on adjusted gross income. It is available to those earning less than $53,505.
Just because you didn’t qualify last year, doesn’t mean you won’t this year. Nearly 20% of taxpayers eligible to claim EITC last year did not claim it. That is 1 in 5, and it’s costing individual taxpayers thousands. Married couples and single people without children may qualify, and may not even know it. The maximum credit for 2016 is $6,269, and the average credit in 2015 was about $2,200. As your marital, parental, or income levels change, you should check or ask a Tax Pro if you qualify.
Qualifying for the Earned Income Tax Credit
How do you know if you qualify for EIC? There are a number of key requirements.
You must have earned income from an employer or from being self-employed. If you are married and file a joint return, at least one spouse must have earned income.
Earned Income Credit Table: reference to determine eligibility for the EIC. Adjusted gross income must each be less than:
Filing Status Qualifying children 0 1 2 3 or more Single, Widowed,Head of Household $14,880 $39,296 $44,648 $47,955 Married Filing Jointly $20,430 $44,846 $50,198 $53,505 Maximum Tax Credit $506 $3,373 $5,572 $6,269
You must have been a U.S. citizen or resident alien for the entire tax year.
You must have a valid social security number for yourself, your spouse if filing a joint return, and any qualifying children listed on schedule EITC
Your filing status must be Single, Married Filing Jointly, Head of Household, or Qualifying Widower. You do not qualify for EITC if your filing status is Married Filing Separately.
Most importantly, you must file a tax return, even if you're not required to
To find out if you qualify, just answer a few simple questions using the EITC Assistant on the IRS website. Last year, the average credit was worth over $2,200. (Link to IRS site calculator)
Members of the U.S. Armed Forces
If you were in a combat zone during the year, you may elect to include combat pay as earned income when calculating EITC. Nontaxable combat pay is not included in income when calculating your federal income tax, but you should calculate your return both ways to determine which way gives you the more advantageous result.
The Importance of Filing, Even If You Don’t Owe Any Taxes
Even if you do not owe any taxes or are not required to file a tax return, it may make sense to see a tax pro. EITC and ACTC are “refundable credits”, meaning you can get these credits back after you cover your taxes. If the credits are greater than your total taxes paid, you may receive a refund - even if you have little or no income tax withheld from your paycheck(s). However, you must file a tax return to receive this credit.
What are the Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC)?
The Child Tax Credits (CTC/ACTC) are federal tax credits that can total as much as $1,000 per dependent child, depending on your income and the age of your children. This credit doesn’t affect the deductions for dependent children, and it is only allowed if you can claim a qualifying child as your dependent. This is a twofer, because you can get the dependent exemption amount of $4,050 AND the credit amount of $1,000 for each qualifying child.
Qualifying for the Additional Child Tax Credit
How do you know if you can claim this credit? First, your children must be claimed as a dependent. Then they must be under the age of 17 on December 31, 2016. Your child must be a U.S. citizen or resident, with a valid tax identification number. Finally, you must be eligible for the Child Tax Credit and unable to use all, or part of, the available amount.
The term “qualifying child” includes your child, stepchild, adopted child, grandchild or great-grandchild, as well as siblings, step-siblings and half-siblings that live with you. Foster children qualify if they were placed with you by a court or authorized agency. To claim the credit, children must live with you more than half the year and must not provide more than half of their own support.
There are income minimums and thresholds associated with this tax credit. For example, you must have $3,000 in taxable wages or self-employment income to qualify, and the credit is reduced, and eventually completely phased out, if your income exceeds the following:
- $110,000 on a joint return
- $75,000 for an unmarried individual
- $55,000 for a married individual filing a separate return
Credits vs. Deductions
One important thing to remember: Tax credits directly reduce your taxes due. Deductions, on the other hand, reduce the amount of your income that is taxable. This can make a big difference on your bottom line. If you’ve been doing your own tax returns, and possibly missed this, there’s good news. You are allowed to go back three years to amend a tax return. Jackson Hewitt will review your returns and determine if you have any missing credits or deductions. This means that you could get additional money in refunds from previous years.
The Fastest Way to Get Your Tax Refund
There are a number of ways to get money earlier. Starting as early as possible will give you a better chance of being in the first round of returns processed by the IRS. Another way to get your refund earlier is to choose to load it onto an American Express Serve® Card. Your refund will be available up to two days earlier than standard direct deposit1. Those two days can mean the difference between getting your refund on a Friday and waiting until Tuesday the following week. It makes a big difference for most of our hard working clients.
Starting your tax season early
If you rely on your tax refund to pay holiday bills, start your tax season early. Beginning November 15, taxpayers can make an appointment to meet with a Jackson Hewitt tax pro by visiting MyRefundAdvance.com. Neighborhood offices will be open beginning December 15th, and offices located inside of Walmart stores will open starting December 27th.
Holiday Tax Loans & The Holiday Shopping Season
Most taxpayers count on getting a refund as soon as possible, but sometimes, that is not soon enough. For qualifying customers, there are loans available based on estimated federal income tax refund. Those loans can make a huge difference between the holiday shopping in mid-December, and the estimated refund timing. You may consider applying for an Express Refund Advance, a no fee, 0% loan available to qualifying clients who prepare their taxes with Jackson Hewitt 2.
Express Refund Advance, a 0% APR Loan
By answering a few questions, taxpayers may prequalify for an Express Refund Advance, a no fee, 0% APR loan offered by Metabank® available to qualifying clients who prepare their taxes at Jackson Hewitt. Please check back frequently as this is coming soon!
Having your tax materials organized will help you gather what you need to file taxes and get your refund as early as possible.You can get started with your paystub or other income verification documents at Jackson Hewitt, and complete 99% of the tax interview. No W2? No Problem. With Jackson Hewitt, you can start in December with your paystub. In fact, you can receive an Instant Refund Advance between $200 - $400 based on your application and estimated tax refund. As soon as your W-2 comes in, you don’t even need to come back into the office. In many cases, we can download your W2. Your tax pro will ensure your W2 data matches the return, and will submit your return to the IRS.
Getting Your Taxes Done Early
At Jackson Hewitt, we know taxes are complicated. And this year, refunds for millions of Americans are going to be delayed.That’s why we’re working hard to help you get off to a good financial start. Talk to a Tax Pro. Make sure you get the maximum refund you deserve. Understand your options for filing taxes early and getting money as quickly as possible.
1 Faster access compared to standard tax refund electronic deposit and subject to IRS submitting refund information to the bank before release date. IRS may not submit refund information early.
2The Express Refund Advance is a tax-refund related loan provided by MetaBank® (it is not the actual tax refund). Loan proceeds available starting no earlier than December 15, for a limited time. The amount of the advance will be deducted from tax refunds and reduce the amount that is paid directly to the taxpayer. Tax returns may be filed electronically without applying for this loan. Availability is subject to satisfaction of identity verification, eligibility criteria, application, approval, underwriting standards, and other terms and conditions. Only $200–$400 available no earlier than December 15 with a paystub (or other acceptable pre-year-end income verification), and remaining amounts available upon filing tax return with the IRS. IRS delays may affect the delivery timing of loan proceeds. Disbursement rules apply. Funds loaded onto card within an hour and direct deposit next business day. See myrefundadvance.com for additional terms and conditions.