Refund or payment?
If you close out our Adulting 101 tax week with a completed tax return, then you’re completely winning at life (as far as we’re concerned, anyway). One of the most dreaded annual responsibilities is behind you, and now you can either sit back and wait for that refund or start your plan of attack on any payment you may owe the government.
Refund me, feds
The fastest way to receive a tax refund is to use IRS e-file instead of a paper return and sign up for direct deposit. Direct deposit securely and electronically transfers your refund directly into one, two or even three accounts. The IRS issues more than 90% of refunds in less than 21 days.
Check out the "Where's My Refund?" tool for a projected refund date, as well as when your return has been received and processed. The IRS updates the site once per day, usually overnight, so there's no need to check more than once during the day. You’ll need your Social Security number or ITIN, filing status, and exact refund amount handy. Refund updates should appear 24 hours after e-filing or 4 weeks after you mailed your paper return.
You can also download the official IRS2Go app to your mobile device to check your refund status, or call the automated refund hotline at 1-800-829-1954.
Smart ways to spend your refund
First and foremost, remain in control. For real. If you end up with a little extra cash, it is far too easy to make poor decisions and spend it on wants vs. needs. Instead, we encourage you to think about some of these ideas:
Catch up on bills.
Pay off debt.
Handle any repairs you’ve been putting off.
Increase (or start) your emergency fund.
Add it to savings for something bigger down the road (like a car or future down payment on a house).
When you owe on your taxes
If you do end up having to pay the government, don’t panic. There are options to pay the whole thing at once or break it up into payments. You can make electronic payments online, by phone and from a mobile device using the IRS2Go app.
What if I can’t pay now?
The IRS is willing to spread those payments over time. Check out their online payment agreement to be able to pay in monthly installments if you can’t pay all at once. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved. You can also use the IRS’s Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe.
And that wraps up tax week. We hope you’ve found these posts helpful as you complete your tax return, or at least learned a thing or two about the process. We know it can feel stressful to deal with finances, which is why we encourage you to learn all you can before diving in. Good luck!