Each year after I do my taxes, I’ve often wondered what happens to my tax return after it reaches the IRS. Well, I procured some answers from a guest writer who offered me the following nuggets of information.
What happens after you file your tax return depends first and foremost on whether the IRS is satisfied with some of the basic information that you provided. If the IRS is satisfied, then they will “accept your return”. If they don’t like it — your return can be rejected.
Why Would the IRS Reject Your Tax Return?
There are a number things that may cause the IRS to reject your return: a name to social security number mismatch, a check to determine that none of the social security numbers provided have already been used on a different return, a verification of birth dates and social security numbers of children who are included on the return, as well as a validation of the employer identification numbers contained on the W2 forms that you provided. In any case, if your return is rejected by the IRS for any reason, you will have to provide the correct or additional information that is requested and resubmit the return. Here’s how to file your taxes for less.
How Your Tax Return Gets Processed
Alright, so your tax return has been accepted, what happens next? In the next step on your tax return journey, the IRS will check your return for any mathematical errors, verify that your filing status matches your exemptions and standard deductions, and that you are legally entitled to any claimed credits. This is also the stage of the game where the IRS is on the lookout for the basic and most common forms of tax fraud. Things such as dependents switching from one tax payer to another tax payer from year to year and dependents claimed that are not actually dependents.
If your return has made it to this point in the process without any hitches or glitches and you are due to receive a tax refund, your refund will be set in motion for release either by electronic transfer or printed check via United States Postal Service, depending how you chose to receive your refund when filing your taxes.
Checking the Status of a Tax Refund
The IRS offers several methods for you to check on the status of your refund. When doing so, make sure to have a copy of your return on hand. When contacting the IRS, you will need the first social security number that appears on the return, the filing status and the exact amount of your anticipated refund. You can contact the IRS on their web site IRS.gov by following the link “Where’s My Refund”, or by phone.
And Keep Those Tax Records!
Just for the record, keep your tax records. It is common practice to keep your tax return records for a minimum of three years. This is a safe bet if you are only filing a simple tax return form 1040EZ. However, it would be more prudent to keep your tax records longer — even up to ten years — if you have more intricate and involved tax returns with businesses, rental properties, stock transactions, IRA’s, home purchases and sales and other financial matters. This is one of the downsides of having a lot of assets: your taxes (along with many other things) get complicated!
Just because you received your anticipated refund or paid any additional taxes that were due, does not mean that you are free and clear of any further actions on behalf of the IRS. Over the course of the next few years, your tax return may be subject to more scrutiny and deeper analysis, with the IRS searching for more fraud flags that could still trigger a full and complete audit of your tax returns. Common red flags are gambling losses, self employment income and expenses, home office expenses, under reported income from W2s. Businesses being audited can oftentimes lead to individual taxpayers being audited. In cases where the IRS finds that there have been any significant misrepresentations of income or deductions, they can asses additional taxes for up to six years.
This article is provided by Backtaxeshelp.com, a site designed to help you pay back taxes. Owing back taxes to the IRS is stressful, and negligence will only worsen the situation. Learn how to get back tax relief.
Copyright © 2010 The Digerati Life. All Rights Reserved.
{ 5 comments… read them below or add one }
One thing to expect as a business owner: if you’re going to start running your own show, be prepared for Uncle Sam to be watching you more closely. I’d expect entrepreneurs to be audited at some point in their “careers”.
Never ever do an amendment to your returns, it amounts to an instant audit. Keep the original copy and receipt in a safety deposit box. Pay with credit card or personal check. Never ever pay with cash.
So are tax issues an argument against cash only living?
Figuring out how taxes works is like figuring out the secret of the Universe. I consider it much like the lottery: sometimes you win (with refunds), most of the time you lose (in returns, tax payments).
@ Penny Stocks – Nonetheless, if the amendment nets you a larger return, it’s often worth the risk. I’ve file amended returns a couple of times and they didn’t result in audits. It certainly does increase the risk, though.