Saturday, 21 August 2010

Methods of Getting Federal Tax Refund.

Getting tax refund is a good thing and joyful. We are getting money which we paid earlier and expected that an expense now recovered. It is not an income and the amount we got as refund is not taxable. So most people considered that it is the reimbursement of a loan we have given to government.  A federal income tax refund occurs when the tax you owe is less than the sum of the total amount of refundable tax credits claimed and the total amount of withholding paid.  For many individual taxpayers those federal tax refunds can be obtained through Earned Income credit, a real refund of overpayment of tax, or through an overpayment from previous years. But it is better to get back money from government than owe money to government.

If you have to get a tax refund you can choose from a lot of options to get back the money. Some of them are Standard paper filing, electronic filing with direct deposit, rapid refunds, and refund anticipation loans and most of the refunds expecting persons choose the rapid refund or the refund anticipation loan.

In this advanced internet world the Internal Revenue Service (IRS) is easy and convenient and quick action through electronic filing. Income tax returns and refunds are very fast. In this scenario we can have a look about the different IRS refund options especially for individual tax payers.

The standard paper filing
The most popular and many people use the method of standard paper filing, but a slow process. No doubt this system will vanish soon because of the tedious paper filing which we adopted earlier and will be replaced by electronic tax filing. The tax refund through paper filing may take around 6 weeks, but now people are not ready to wait for six weeks to get a tax refund which seems a long time in this internet world.

Electronic tax filing
Electronic tax filing is soon and rapidly replacing the standard paper filing method and enables you to get a refund within 10 -14 days. No doubt the delay in getting the refund itself will replace the old system with a most modern electronic filing and can be submitted without any additional fee and these returns can be filed for free through many local, public access facilities.

The refund application loan

The refund application loan is different that the above two options and it should be administered by professional through an established alliance with a financial lending institution. It is really a loan taken on the security of an expecting tax refund. So the financial institution should confirm that the refund is not only anticipation and it is a real one. You will get excellent professional support to file your tax return and there are a variety of choices are also there in such a return and loan. There will be a loan fee and also there is a small interest for the loan amount till the financial institution get back the refund and close the loan account. There are several restrictions placed on receiving a refund anticipation loan, and some of the restrictions may affect many people.  For example, if you owe back taxes, back child support, or liens and judgments, you can’t qualify for the refund. Most of the times the individuals who applied for refund application loan have thousands of dollars to be refunded. This refund application loan can be processed in three hours and the loan money will get to the applicant at the afternoon itself. The professionals’ charge a high fee and also the banks and financial institutions charge a high interest for this loan. But most of these applicants do not bother about these charges and they need to get refund soon and should avoid the time delay of processing and getting back federal tax refund.

My advice is those submits your tax returns electronically and wait for the short delay of 2 weeks to get the refund to avoid expenses such as professional fee and interest.

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