It is never too early to check whether your tax refund is in order. The last thing you want to do is wait until the tax day starts with the preparations.
Instead of postponing to the last minute – and possibly missing essential information in your tax return – you can now start calculating your 2020 tax refund before 2020 is even here.
1. Consider whether you will get money back at all
Almost 3 in 4 reporting officers receive a refund, which means that you are in good company with millions of people. The rest of us will owe the money from the government.
Generally, your refund is calculated by how much money is withheld for the federal income tax, minus your total federal income tax for the year. (There are also other factors such as deductions – more about that soon.) Remember that taxes withheld from your salary do not always go to the federal income tax. You also pay in social security, Medicare and, depending on where you live, income tax.
If you received a lower refund last year or actually owed money, you may need to adjust your deductions to make sure you get enough money out of the tax while it still counts. Otherwise you get a larger tax assessment in April, which means that you owe money instead of getting it back. (There is also a chance that your tax bracket will change; if you have earned more, you may also owe more.)
You can use the tax deduction from the tax authorities to ensure that the correct amount is deducted from your salary . , whether they are weekly, biweekly or monthly. It is good to have a recent paystub and tax return to hand to get the most accurate information when you use the estimator before you submit your tax return. Keep in mind that it works for most filers, but not necessarily for every filer. Every family situation, gross income, exemptions, deductions and other factors can completely change how much you receive or owe.
2. Collect your required documents
Before you start math, you need a few different items for your calculations, including:
- Personal data: Your age, archiving status (single, jointly married, married file separately, principal household), if you have dependents and, if so, how many and their ages.
- Information about income: Your income before taxes, pension plans, how much you claim in deductible items and taxes you have already paid or withheld this year. Some popular deductions include the tax deduction for children, interest deduction for student loans and the deduction for the home office.
- Business expenses: If you work from your home or have paid for work-related items, you may be able to claim these from your taxes or request exemptions. Keep in mind that if you are a business owner, the business tax is filed separately or that you have to account for that income on your personal tax return. First read which expenses are eligible before you submit them with specified operating costs.
- Other details: Think of things like medical costs, donations, interest on your mortgage, interest payments for student loans, childcare costs and more. You might also think that your income places you in a new tax bracket, which can change how much you get as a refund (and possibly owe money).
If you do not have this information immediately available, you may not be able to accurately calculate your tax refund for 2020.
3. Find a reputable tax refund calculator
Large tax software companies offer tax return estimates and calculators to help you determine how much you can expect to get back as a tax refund. Search calculators from:
Aside from tax-specific companies, there are other places to calculate your return, such as:
Although the layouts of these calculators are not the same, much of the information requested is. Make sure you have all the necessary documents at hand before you start your calculations. If you do not do this, it may take longer to calculate your refund, or you may not receive an accurate calculation.
Do not wait until tax day to submit
If you have completed the math and discover that you are getting a proper tax refund, do not wait until the last moment to submit a file or e-file. Now that you are done, you can start archiving as soon as you have received your W-2 & # 39; s from your employer. This usually happens around the end of January, but varies depending on your employer.
Because you have gathered all the necessary documents to calculate your tax refund for 2020, this means that you are almost ready to actually file a file. Instead of waiting until April to submit your tax return, the earlier you file your tax return, the sooner you receive your refund. Also keep in mind that you can receive your money even faster if you make a direct deposit. Don't waste your time waiting and submit as quickly as possible so that you can join millions of other Americans who are expecting a return.