About This QuizThere's not much to like about tax season unless you're a tax accountant, but there is a bright side: the refund! How much do you know about tax refunds?
What was the average tax refund in 2010?
A Completetax.com survey indicated that U.S. taxpayers received an average federal tax refund of $2,800 in 2010.
When you overpay taxes and get a large refund, the IRS does this.
pays you the interest earned
sends you a thank-you note
pays no interest
If you get a huge refund, then the IRS, not you, was able to earn interest on that money.
If April 15 is nearing fast, and you need that refund but aren't prepared yet, it's best to do what?
File when you're ready, even if it's April 16.
Hurry up and get it done no matter what it takes.
File an extension.
Extensions are common and the IRS doesn't frown upon them. They allow you the time to find as many deductions as possible, thereby getting a bigger refund.
When you mail in your tax return on paper, when can you expect your refund?
four to eight weeks
When you file your taxes on paper forms and via the post office, it can take as long as two months -- or more -- to receive your refund.
one to two weeks
three to six months
When you e-file your tax return via computer, when can you expect your refund?
E-filing is quicker! You can expect your refund in about 10 days.
Which of these can you legally do to get a bigger refund?
claim other peoples' children on your tax return
set up a fake home business in order to get a bigger refund
neither of the above
Tax experts say you should do absolutely everything possible to get a bigger tax refund, short of breaking any laws. Making false claims or faking a business will get you in trouble for tax fraud.
If instead of receiving a refund, you've underpaid your taxes, what should you do?
just pay what you owe
worry -- you may be subject to penalties
You typically need to have paid 90 percent of what you owe, or 100 percent of last year's tax bill, in order to avoid penalties for underpayment of taxes.
hope the IRS won't notice
If you end up with a large refund, what might you consider doing?
go on a spending spree
give it back to the IRS
In some cases, you may want to have the IRS hold your refund in order to apply the amount to next year's taxes.
head straight to the racetrack
What might a really big refund mean?
You're a smart saver.
You're having too much money withheld on your W-4 IRS form.
You can reduce the amount withheld from your paycheck each pay period to get closer to a break-even position with your taxes withheld versus taxes owed.
The IRS made a mistake.