There is a lot of tax jargon you’ve encountered during your tax assessment process. Most of which you don’t really know what they mean. Some are intertwined with each other, so you can confuse one terminology for the other.
A good example is a tax return and tax refund. Therefore, it’s important to prime yourself on the basic tax terminologies to be able to file your tax correctly. Read on to discover the differences between tax returns and tax refunds, and how tax resolution experts in El Paso, TX, can help you.
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What Is a Tax Return?
A tax return is a document you fill out reporting your income, expenses, and tax bill from your income. The document is filed with the Internal Revenue Service (IRS). Generally, the document will outline how much income you get, where the income came from, and how much money the IRS withheld for taxes over the past year. The details are acquired from the W-2 statement.
Moreover, the returns also include deductions and credits, which usually reduce your tax bill. Its complexity depends on your domestic and financial situation. You’ll need to fill out other additional tax forms if you have different types of income or life events. Keep in mind you must file your tax return before a certain deadline; for 2021, it’s on 18th April 2022.
What Is a Tax Refund?
On the other hand, a tax refund is the amount of money the IRS sends back to you after assessing and revising your tax return. It’s more of reimbursing an excess amount you’ve paid while filing tax. The tax refund is, however, not given to all taxpayers.
When your tax returns start to show that you are paying more taxes than you should, you’ll get a refund. The IRS is transparent as three-quarters of America’s taxpayers receive their refunds.
Are the Tax Return and Tax Refund Closely Related?
Even though these two tax terminologies are different, they are closely related. To get a refund, you must file your tax return first. Additionally, the deductions and credits you put out on the tax return can result in a larger tax refund.
There are various ways to ensure you get a huge refund; they include tax deductions, tax credits, and itemized income tax returns. You can also maximize your retirement savings; a good example is having an opportunity with 401(k) and 403(b). Putting as much money on there can help you get a larger refund.
If you want to receive your tax refund earlier, you’ll have to file online and accurately – Choosing direct deposit also speeds up the process to less than 21 days. Remember, a manual review will be necessary when your return has errors and is affected by identity theft or fraud.
What to Do with Your Refund Money
You’ve confirmed with IRS; that you’re eligible to get a refund. It’s easily tempting to go on a spur spree, which is not advisable. A tax resolution CPA can help you make an informed decision by letting your refund work for you. The money you receive can offset other tax obligations you have; it can help you pay off your college student loans or pay your credit card bills, for instance, increasing your overall credit score.
The Distinction between Tax Return and Tax Refund
These two terminologies may sound the same, but they mean different things during tax season.
A tax return is an annual file of your total gross income, deductible, and tax liabilities you owe the IRS. Conversely, a tax refund is money you receive from the IRS after reviewing and assessing your tax return. It’s important to note that not all taxpayers get refunds.
The refund is calculated based on the information provided on your tax return. It determines who is eligible and who is not. If you’re eligible, you’ll get your money directly refunded to you.
It’s, therefore, advisable to file your returns in due time accurately. You’ll avoid some serious consequences for late filing and get your refunds easily. The returns must be accurate as they play a huge role in getting your refund approved.
Tax Resolution Experts in El Paso, TX and Las Cruces, NM
You need a proficient tax resolution expert to successfully file and resolve all your tax problems. The consequences for such issues are dire, and the IRS will haunt you until you complete its payments and penalties. To be on the safe side, consult a tax resolution CPA. They’ll evaluate your tax situation and give you possible options for resolving them.
Are you looking for a trusted tax advisor in Las Cruces? Contact a tax resolution CPA for all your tax needs. The years of experience garnered serving the tax needs of taxpayers in El Paso, TX, have put these experts in a better position to offer reputed services. Why wait? Reach out to a tax resolution CPA today for any tax-related services.
If you’re looking for a reputable CPA firm in El Paso, TX consider calling us at Marcus, Fairall, Bristol + Co., PLLC! We’ll answer any and all of your accounting-related questions. We offer our clients a variety of accounting services such as the following:
- Forensic Accounting
- Tax Problems and Resolution
- Tax Planning for Individuals
- Small Business Accounting
- Non-Profit Accounting
Marcus, Fairall, Bristol + Co., PLLC
230 Thunderbird Dr Ste G, El Paso, TX 79912
Phone: (915) 775-1040