Finance Tax Time

Every year, the IRS announces that it is holding unclaimed tax refunds. Taxpayers have a limited time to claim the $2 billion dollars the IRS is currently holding.

Three years is a magical number when it comes to tax returns. It refers to the statute of limitations on certain tax issues such as when an audit can occur, when refunds can be claimed and when amended tax returns can be filed. The IRS is currently holding $2 billion dollars in unclaimed tax refunds for the 2002 tax year and taxpayers must file their claims by April 17, 2006 or lose the refunds forever.

Approximately 1.7 million people are due refunds out of the $2 billion dollars currently held by the IRS. These people have refunds due because they failed to file tax returns for 2002. This occurred most likely because people felt they did not make enough money to warrant filing a tax return. By failing to file, however, they have left $570 on average with the IRS.

If a taxpayer fails to claim the tax refund by filing a tax return for 2002, the money will default to the federal government. Importantly, there is no penalty associated for filing late if a taxpayer is due a tax refund. This is common misconception among non-filers.

One group of taxpayers that almost always has a large percentage of non-filers is military personnel. Obviously, it is a bit hard to file from Afghanistan, but now is the time to do so for 2002. Members of the military that failed to file in 2002 are owed an average of $749 per taxpayer.

The IRS releases demographic on the areas in the United States where refunds are due. To this end, California and Texas are the states where the most individuals are due refunds while Idaho has only 6,200 people due a refund.

Nobody finds filing taxes an exciting prospect. The pain is much less, however, is you know you are due a refund. If you failed to file in 2002, you might be throwing away a nice little chunk of change.

Richard A. Chapo is with http://www.businesstaxrecovery.com - recovery of business taxes through tax help and tax relief. Visit http://www.businesstaxrecovery.com/articles to read more business tax articles.

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You may not think that big tax refunds are a problem-but they can be. If you are withholding more on your paycheck than you get as a refund, then you should consider getting your withholding less and getting smaller tax refunds. The government is using your money all year without paying any interest. Then, they give you some of that money back. If this is the case with you, think about your tax refunds and how you can better manage your finances to make more out of your money.

Taxpayers in the United States receive average tax refunds of between $2,000 and $3,000 every year. Some of these refunds are to people who have limited incomes and get large tax credits. But, many are from people who just pay too many taxes. If you are in the second group, you should try to change your deductions so that less is taken out of your paycheck and your tax refunds are smaller. The extra $50 to $200 or more dollars a month can make a big difference in your monthly budget.

Pay down debt with tax refunds-especially your higher interest debt like credit card debt. If you can pay down your credit cards or even pay them off, you will give yourself even greater financial security.

Buy stocks or invest your refund to make even more money off of it. This way it is working for you rather than for the government.

You can make home improvements with your refund. Fix up your kitchen and your bathroom and get a great return on your investment if you plan on selling your home in the next few years. Even if you don’t sell your home, you will be more comfortable in it.

A great way to use tax refunds is to use them for car repairs and maintenance. Gas prices are skyrocketing leaving little money for emergency car repairs or even a basic tune-up. You can protect your investment by doing some simple maintenance and prevent bigger expenses down the road-even detailing your car can have a big return if you decide to sell your car.

If you can’t think of anything else to do with your refund, you can always save it. Put it in a high-interest savings account or a CD. This will give you even greater financial security and you will have something for a “rainy day” or for your “someday” trip to Europe.

Eriani Doyel writes articles about Finances. If you would like more information about tax refunds visit faqtaxes.com

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If the tax you owe is less than the total of the amount of refundable tax credits that you can claim and the amount of the withholding that you paid, then you can expect a tax refund. Why? The most recent tax law provided for a new 10% tax bracket. This means that, depending on your tax category, the first $6,000 to $12,000 of your earnings will be taxed at 10 percent instead of 15 percent. To a lot of Americans, this seems like good news. But is it really?

Many financial experts are quick to interpret the tax refund as a loan that the government borrowed from you - a loan that it is now paying back to you, interest-free. For this reason, some people see tax refunds as an inadequate premium. It is nothing more than excess money you paid, which the government used, and is now giving back to you with no interest.

For a greater majority, however, tax refunds are mere ’savings’ - money that the government kept for you that you are now going to get back for use in other things. Many Americans are pleasantly surprised to receive tax refunds each year. Most people use the money to pay off debts, beef up savings accounts, and even go on vacations.

To get your tax refund you have three options. You can either let the government directly deposit your tax refund into your bank account, have a check mailed to you, or apply your refund to next year’s income tax.

Bank of America, Wells Fargo, and other major banks have a routing number exclusively for direct deposits, which can make your life easier. However, if your account is with a credit union or other type of financial institutions, your tax refund may be rerouted to another institution. Be sure to verify the routing number with your credit union, because it is not always correct on the check. Also, remember that the IRS will not advise you or your bank that your tax refund has been deposited, so it’s your job to do follow-up work.

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