The Affordable Care Act will not affect your 2014 IRS refund. New required health care insurance programs and exemptions will take effect in 2014 but will affect taxes you do in 2015. So for now, the minimum essential coverage you’ve been hearing about won’t affect your taxes for the tax year 2013.
What Will Affect Your 2014 IRS Refund?
There are some changes in effect that will in fact affect your 2014 IRS refund. One of the major changes is to the Itemized Deduction for Medical Expenses. If you plan to itemized your medical deductions (usually people do this when they have a lot of medical expenses) then pay attention because the rules have changed for tax year 2013.
You can basically deduct medical expenses that add up to more than 10% of your annual income (your adjusted gross income, actually). Any amount that totals less than this isn’t allowed as a medical expense deduction. This will affect, perhaps reduce your 2014 IRS refund since it essentially sets a threshold for allowed medical expense deduction. Your refund will possibly be smaller.
If you are over 65 then the threshold is thankfully a little lower: 7.5% of your AGI. This is a temporary phase, since in 2017 the 10% rate comes back.
The Great Determining Factor for Your 2014 IRS Refund
The medical expense deduction will affect 2014 refunds but as always the great factor is your withholding amounts. If you are having too much withheld from your paycheck then you should submit a fresh W4 to your employer and have it corrected. Always review your withholding if you have had a major life event take place during the year.
Getting a tax refund is something many Americans look forward to each year. While retailers would love us to spend our refund money on luxury goods and one-time splurges, it’s better to invest the money or save it. Did you know that if you invest your tax refund every year, you will end up with something like $44,000 in just twenty years? That’s assuming a modest 5% rate of return on your investment, and an IRS refund of $1200 per year. That’s over $19,000 of interest earned and the rest is your refund money.
Splurge or Save?
Now compare that to the giant, hulking large-screen TV taking up half your living room. That’s what you spent the refund money on last year. The value goes down every year…you want something better and the market value goes down too. Spending your IRS refund on the newest tech gizmo or entertainment gadgets might feel good at the time, but is it the wisest thing to do with your money?
Whose Money Is it Anyway?
And keep in mind: it is actually your money. The tax refund is not a refund because the IRS changed its mind and decided to charge you less taxes. It’s just money they took from your paycheck that really shouldn’t have been taken. It’s called withholding and sometimes too much is taken out. That’s when you get it back, after filing your federal taxes.
If you don’t invest the refund, at least use it to pay down bills you have. A solid investment in your future is the best way you can use that IRS refund you have coming to you.
If you are counting the days, no – minutes until your IRS tax refund hits your bank account, then something is not right. The IRS offers a page on their website called Where’s My Refund? You can log into their system and find out the status of your tax refund, from any computer. That’s a good service, since it’s nice to be able to keep track of your refund money.
Spend it Wisely…
But if you’re checking every few hours, every day then obviously you are counting on that money for something. And that’s not a good sign. Of course sometimes we can’t help it if we run into financial trouble and desperately need cash. But if you’re dreaming of splurging on luxury items then forget it: you’re not acting in your own best interest.
Get Your House in Order
Instead of buying a new TV or remodeling your kitchen, get your financial house in order first. Then, if you have some left over and you really want to buy yourself something, you still can. First order or business should be to get rid of high-interest debt. Credit card debt is a ball and chain around your leg and it will drag you down until you get rid of it. Use your IRS refund to whittle it down.
If you don’t have credit card debt, you can either invest your IRS refund or shore up your emergency fund. More about that here.
Eagerly Awaiting Your Tax Refund
Maybe if you’re going to spend that refund wisely, you won’t be quite so anxious to know the exact moment it arrives in your bank account. Yes it’s nice to know you’re going to invest for your future but you certainly have better things to do than check the refund status page every day.
You may think you have a pretty good idea of how you want to spend your tax refund, but do yourself a favor and consider these rules of thumb. They will help you make your IRS refund really pay off.
Treat Your Refund Like It’s an Inheritance
Your IRS refund isn’t a gift- it’s your money. You earned it but didn’t have access to it for a while. Some see the IRS refund as a non interest bearing savings account: the IRS holds your money for you but you get no interest. So, consider the money to be an inheritance from yourself. Invest it wisely, use it for practical things and make it last. It’s your chance to improve your financial future.
You could use your refund to remodel your kitchen, or update your wardrobe with designer clothing, but just think for a moment. You can put the money to much better use and prepare for a downtown in the economy. Shore up your financial fortress and you’ll be putting that refund to much wiser use.
Your Emergency Fund
If you don’t have one, now’s the time. Keep three to six months’ worth of living expenses handy in case there’s a bad economic downturn. Some say more.
Your Credit Card Debt
If you have it, get rid of it. Interest on credit card debt is crippling to your personal budget and you should get out of debt. You are cannibalizing your finances by carrying credit card debt.
Invest the Rest
If you don’t have credit card debt and you have a nice emergency fund, invest the rest. Put it into an IRA for your retirement and you’ll be doing yourself the best favor.
Do you have an IRS refund coming to you? Some taxpayers eagerly await tax season because it means a nice fat check from the IRS…an IRS refund. Now, we all know it’s not a windfall. It’s not a gift from the IRS. It’s your money- you just haven’t seen it in a while. The IRS has been holding it in a non-interest-bearing account. It’s rather like your money was in jail and now it’s released.
The Quickest Way Out of Jail
Well if you want your money the fastest way, sign up for direct deposit when you do your taxes. Wait- go back one step: do your taxes electronically. That means: e-file! Your tax prep guy can e-file for you or you can do it yourself online. Either way, it’s the best and fastest route to a speedy IRS refund.
As we said before, choose direct deposit instead of having a paper check mailed to you. It’s about twice as fast and more secure. Paper checks have a way of getting lost. ..not to mention taking forever to get to you.
The other way to ensure the fastest tax refund is to make sure you don’t make any mistakes on your tax return. Mistakes will put up a red flag on your return and your refund will not go anywhere until those red flags are investigated by a person at the IRS. Once that happens, there’s no telling how long it will take until you see your money.
If it’s your first time filing your taxes here’s a quick beginners’ guide to the IRS refund. It’s the money you get back from the IRS after doing your federal taxes. When you get a paycheck, you may notice that some money is taken out of each check. That’s money your employer withholds from you…but your boss doesn’t keep the money. It’s sent to the IRS on your behalf. It’s called withholding.
When you do your taxes after the end of the year, you may have some of that withholding coming back to you. That’s why it’s a very good idea to file your taxes on time! Most people are very excited to get their IRS refund, and that’s understandable. Sometimes it’s hundreds and hundreds of dollars!
In fact, people sometimes count on the IRS refund for major purchases. For that reason, they like to know when it’s coming. Well, thank goodness there’s an IRS refund schedule anyone can consult at any time.
Basically the IRS refund schedule will give you a window of time during which your refund comes to you. Depending on the method you chose: paper check or direct deposit, it can arrive anywhere from 10 to 21 days.