With COVID-19 wrecking the economy and forcing millions of Americans out of their jobs, many workers are now scrambling to file for unemployment benefits, take out loans, or do whatever they can to ensure that they're able to pay for essential expenses in the coming weeks and months. But you may have another source of cash coming your way that can help in this regard: your tax refund.
Each year, the majority of taxpayers who file a return wind up getting some amount of money back from the IRS. If you're in that boat, the sooner you file your taxes, the sooner you'll get paid. That said, there are a few moves you can make to increase your chances of getting your refund without delay.
1. Don't take advantage of the extended tax-filing deadline
Taxes are due on April 15 each year, though that deadline gets pushed back by a day or two some years when it falls during a weekend. This year's tax deadline was supposed to be April 15, but due to the COVID-19 crisis, it was recently pushed back to July 15.
This gives taxpayers an extra three months to not only get their federal tax returns in order, but also pay any tax debt associated with them. However, if you're anticipating a refund, you should make every effort to get your taxes done in time for the original April 15 deadline, if not earlier.
2. File your taxes electronically
Filing your taxes electronically can help expedite your refund in a couple of ways. First, the IRS typically processes returns filed electronically much faster than it does paper returns -- three weeks versus six weeks. Secondly, filing electronically substantially reduces your chances of making a mistake that could delay your refund. In fact, the error rate for electronic returns is under 1%, but for returns filed on paper, it's 21%.
3. Sign up for direct deposit
If you're due a refund, the IRS can either issue you a check by mail or send that refund directly into your bank account. The latter will get you your money sooner and eliminate the potential for your check to get lost in the mail.
That said, if you're going to opt for direct deposit, make sure to put in the correct account and routing number. Putting in the wrong information could hold up your refund significantly.
4. Avoid mistakes that could get your tax return audited
Getting audited may seem like a scary thing when actually, it's not such a huge deal. Most audits are conducted by mail and resolved fairly quickly. That said, one thing an audit can do is delay your refund, so to avoid having that happen, make sure to:
- Report all your income, including investment income, bank account interest, and earnings from a side gig.
- Claim accurate deductions.
- Only file for tax credits you're eligible for (filing electronically can help you determine which you can and cannot claim).
Many Americans are, unfortunately, desperate for money right now. If you're one of them, your tax refund could serve as a lifeline, so it pays to do whatever you can to get that money in your pocket as quickly as possible.