When Uncle Sam Screws Up: What to do if the IRS loses your refund

Unfortunately, a missing or inaccurate tax return refund can be really difficult to track down. Long wait times on the phone and the inability to simply text Uncle Sam to get the issue resolved can mean waiting weeks, months, even over a year to get your money back. Here is what you can do to make sure a lost refund ends up in the hands of its rightful owner (that’s you!) as quickly as possible.

If the IRS loses your refund, or refunds the wrong amount, or just never sends your refund at all, no problem!

Simply call ‘em up, let them know you haven’t received your funds, and watch as the missing money magically appears in your bank account.

Right?

Unfortunately, a missing or inaccurate tax return refund can be really difficult to track down. Long wait times on the phone and the inability to simply text Uncle Sam to get the issue resolved can mean waiting weeks, months, even over a year to get your money back.

Here is what you can do to make sure a lost refund ends up in the hands of its rightful owner (that’s you!) as quickly as possible.

Get it right the first time

When you consider the fact that there are hundreds of millions of Americans filing taxes and receiving refunds each year, Uncle Sam’s overall accuracy is amazing.

However, that’s not very comforting when you’re the one who’s owed thousands of dollars that have simply gone missing.

The best way to prevent a missing refund is to make sure your original return is filed accurately. When you start amending returns, making changes, and increasing the amount of paperwork the IRS has to do, mistakes are much more likely to happen.

Wait 16 weeks

The IRS is still playing catch up after last year’s government shutdown, so the amount of time it will take to get your refund is longer than usual. Even if you’ve opted to receive an electronic refund, it could still take up to 16 weeks for your refund to show up in your bank account, with the absolute fastest turnaround time being 21 days.

Check Where’s My Refund?

While you’re waiting, you can check the status of your return by visiting Where’s My Refund? on the IRS website.

Be sure it’s been longer than 24 hours since filing electronically, and longer than 4 weeks if you filed by mail. You’ll need to provide your social security number, filing status and the exact amount of your refund. You’ll then be able to see the date on which you can expect your return to be deposited into your bank account or for your check to be mailed.

Opt for Power of Attorney

So what happens when you wait 16 weeks, you check Where’s My Refund?, and the IRS has no record of monies owed?

It’s time to call in the big boys.

If your refund is simply nowhere to be found, you will need to contact the IRS. If you work with a tax professional, you may need to sign over Power of Attorney so they can investigate the missing money.

Be sure to keep copies of any and all correspondence you’ve received from the IRS, especially the letter indicating the amount of your return.

If the IRS claims to have mailed you a check, but you’ve never received said check, you may need to file a claim and open an investigation. If the check was lost in the mail, the IRS can issue a new one. If the check was cashed by someone else, you may need to deal with issues of identify theft and/or fraud.

Don’t count on those tax return dollars

When your refund is lost, the best thing you can do is be patient. When you’re due a refund, it’s easy to start planning what you’re going to do with the money once you receive it. A lost refund, however, could take many months to find, so think of your refund as more of a surprise bonus than money you can count on to pay bills or upcoming business expenses.

Has the IRS every lost your refund? What did you do?

How to Avoid an Audit

Chances are high that you’ll never have to worry about being audited, but it’s something many small business owners and individuals fear. While it’s not possible to completely avoid an audit, you can decrease your chances somewhat by avoiding these IRS “eyebrow raisers.”

Chances are high that you’ll never have to worry about being audited.  The IRS audits less than 1% of all income tax returns submitted each year, with that number expected to trend even lower in the future.

Budgets cuts, an increase in identity theft cases, and last year’s government shutdown have Uncle Sam pretty backed up, so audits aren’t a huge priority – at least for now.

If you’re scanning receipts, tracking your write-offs and declaring all of your small business revenue, you should have nothing to worry about even if you were audited.  However, even if your books are spotless, no one wants to trigger an audit. It’s like volunteering to go to the dentist.

While it’s not possible to completely avoid an audit, you can decrease your chances somewhat by avoiding these IRS “eyebrow raisers.”

You’re more likely to raise an IRS eyebrow or two if you:

Make a ton of money

The more you make, the more Uncle Sam keeps his eagle eye on your.  People who make more than $200,000/year are more likely to be audited than those who don’t.

This certainly isn’t a reason to purposely avoid achieving that 6-figure goal you set for yourself.  Just know that once you meet that goal, you need to be even more diligent about tracking your income and expenses.

“Forget” to declare your income

Remember that the IRS has access to your income forms. If an employer or contractor submits a W2 or 1099 form for you, and you don’t include that income on your tax return, the IRS immediately gets suspicious.  Make sure all current and past employers, clients and contractors have your current mailing address so you get all of your tax forms from the previous year.

Also, keep in mind that you’re ultimately responsible for declaring your income. If a client does not issue you a 1099, it doesn’t mean you don’t need to claim that income! They made have made a mistake, but you still need to let the IRS know how much they paid you.

Go crazy with the donations

If you make $75,000/year but are claiming charitable donations of $2 million, Uncle Sam will become a bit concerned. You can absolutely take advantage of the donation deduction, but make sure it’s at or around what’s reasonable for your income level. The IRS actually has an internal way to measure the average annual donation amount for all tax brackets. Use common sense.

Claim a home office deduction

This is a tricky one. The home office deduction is a completely legitimate write-off for many small business owners. The reason it raises a flag with the IRS is because many people attempt to claim a higher amount than they’re entitled.

In order qualify, you must use an area of your home for business, and only business. This doesn’t mean that sometimes you come home from work early and work on the couch. It also doesn’t mean that your desk doubles as the dining room table.

Also, remember that you’re only allowed to claim things like utilities and square footage for the area of your house that constitutes the office. You can’t write off monthly electric expenses or Internet charges for the house as a whole.

Drive a “business only” vehicle

If you take a deduction because you’re using a vehicle for business, it may be more difficult to avoid an audit. Be sure that the vehicle in question is really only used for business purposes, and that you’ve kept detailed, accurate records of the vehicle purchase, maintenance and mileage.

Remember that while it’s not always possible to avoid an audit, it’s absolutely possible to survive an audit unscathed. Detailed record-keeping throughout the year will be sure to keep the IRS at bay.

Have you ever been audited? What was it like?

No Rendering of Advice – The information contained in here represents the opinion of Shoeboxed, Inc. and is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant or attorney. We advise not to act upon this information without seeking the service of a professional accountant. Any U.S. federal tax advice contained in this website is not intended to be used for the purpose of avoiding penalties under U.S. federal tax law. 
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3 Ways to Pay Your Taxes to Uncle Sam

You’ve finished filing your taxes, and all that’s left is to pay your taxes to Uncle Sam. Here are several simple and fast ways you can pay your tax obligations, courtesy of our friends at GoDaddy Online Bookkeeping.

This post is brought to you by GoDaddy Online Bookkeeping (formerly Outright) the simplest way to manage your small business finances online. Sign up today for a less taxing tax time! 

Well, there’s good news and bad news. The good news is you finished filing your taxes and you can move on with the rest of your life. The bad news is you owe money instead of getting a nice refund.

This is bad on two levels; one, you owe money, and two, it’s notoriously difficult to pay to the IRS. There’s a huge rigmarole to go through and you’re pretty sure you have to sign over your first-born. The IRS never makes things easy, right?

Actually this time you couldn’t be more wrong. There are several simple and fast ways you can pay your tax obligations. 

1. EFTPS

This is by far the easiest and best way to pay your taxes. The Electronic Federal Tax Payment System is actually set up by the IRS as a secure and easy way to pay. Best of all, the system lets you set up payments on a regular basis for not only your federal taxes but also for things like your quarterly estimated taxes.

All you have to do is enter some basic info in the link provided above after clicking Enroll. This also involves entering your bank info so money can be instantly transferred. Now you can pay all you owe or set up payments to automatically come out. It honestly doesn’t get much easier.

Here’s a step-by-step guide to setting up EFTPS.

2. Credit Card

 So you don’t want to set up a profile at EFTPS, as you expect to only pay the once. No problem! You can actually pay with a credit card as a one-time payment. If you have a payment that’s small enough you can immediately afford it, go for it.

However, there is one little issue: fees. You see, the IRS doesn’t take credit cards, payment processors do. These processors come with varying fees you’ll have to shell out in order to pay off your tax obligations. Luckily they’re generally only a couple bucks, though, although if you have a substantial tax bill you may end up paying a big chunk in fees, too.

 3. Payment Plan

Can’t pay it all at once and don’t want to set up a profile on the EFTPS? Then you need a payment plan, which is surprisingly easy to get. Simply submit Form 9465 (also Form 433-F if you owe more than $50,000) and you’ll have a payment plan ready to go.

The money will simply deduct from your account every month on whatever date you decide. Also, because the IRS wants their money, the payment plans are generally approved without a hitch. After you submit the form you should get notice back in a few weeks. The payments will then continue through when you’ve successfully paid everything off.

One thing to keep in mind is next year if you incur more tax obligations you must submit a new payment plan. The new total isn’t added to the payment plan automatically and assuming it will might land you in hot water. Just be sure to send in a new Form 9465 to create a brand new plan.

How do you pay the IRS?