How to return an incorrect Tax Refund?

How to return an incorrect Tax Refund?

by | Feb 7, 2020 | paper treasury cheque, Tax Refund, Tax refund cheque

How to return an incorrect Tax Refund?

There might be situations in which you might have obtained an incorrect tax refund. You are not entitled to obtain that tax refund or you might have obtained more than what you should obtain; in such cases, you can return the incorrect tax refund.

There can be several scenarios related to incorrect tax refunds obtained from the IRS.

  1. In case of the refund obtained was a paper treasury cheque and has not been cashed.
  2. In case of the refund obtained was a paper treasury cheque and has been cashed.
  3. In case of the refund obtained being a direct deposit.

Refund is paper treasury cheque and has not been cashed

In this scenario, the below-mentioned steps can be followed.

  1. On the back of the cheque in the endorsement section, “Void” has to be written.
  2. The paper cheque must be submitted immediately to the correct IRS location but by 21days of receipt of the refund. The appropriate location i.e. the name of the city is mentioned in an abbreviated form in the bottom text line. It is mentioned just in front of the words “Tax Refund” in the Refund cheque.
  3. You should simply place the cheque within the envelope without bending it, putting any staple or paper clip on it.
  4. You will have to add a note highlighting “Return of erroneous refund cheque” and should explain in brief the actual reason for returning the refund cheque.

Refund is paper treasury cheque and has been cashed

In case the refund received is erroneous, is in the form of paper treasury cheque and has been cashed then the below-mentioned steps need to be taken.

  1. In this case, you must submit a personal cheque or a money order to the appropriate IRS location. The location i.e. the name of the city must be mentioned in the form of an abbreviation in the bottom text line just in front of the words “Tax Refund”.
  2. This should be done immediately within 21 days of the receipt of the tax refund.
  3. Suppose, you do not have access to the copy of the cheque then you can contact the operations team of the IRS and connect with the assistor. The assistor will give you detailed information on what to do for returning an erroneous tax refund.
  4. You need to mention certain details on the cheque or money order which you are submitting to the IRS.
  • You need to write “Payment of erroneous refund” on the cheque or money order.
  •  You will also have to mention the tax period for which the tax refund was issued and TIN (Tax Identification Number).

 5. Along with these details, you should also give a brief explanation of the reason for which the refund is being done.

 6. Since you have cashed an incorrect refund cheque you might have to pay some additional interest to the IRS.

Refund is done by direct deposit

  1. You will have to contact the Automated Clearing House (ACH) department of the bank or the financial institution where the direct deposit has been received. You can inform them about the actual cause and request them to return the refund received to the IRS.
  2. You will have to call on the IRS toll-free number and explain to them the reason underlying the return of the refund obtained in the form of a direct deposit.
  3. There may be a need for paying interest on the erroneous refund.

In general, when there is a change in the tax refund by the IRS then there would a notice sent by the IRS to your mailing address. This notice would explain to you the reason for the adjustments made by the IRS in the tax refunds. You should review the information given and check the refund. Moreover, you can contact the toll-free number for further support or information on this.

Conclusion

So, obtaining an incorrect tax refund can be quite a common happening but when you have an idea of what to do next then it would be easier. You can easily return your incorrect refund obtained and generate the request for obtaining the correct refund soon. 

Reference

  1. https://www.irs.gov/taxtopics/tc161

 

How exactly do you process a tax refund as an NRI in the US?

How exactly do you process a tax refund as an NRI in the US?

by | Feb 5, 2020 | 1040-NR-EZ, Form 1040-NR, tax filing, Tax Refund

How exactly do you process a tax refund as an NRI in the US?

In the US, Do you process a tax refund if you are an NRI then while filing your tax return you would be considered as a Non- resident alien in the country. A non-resident alien is an alien who has not cleared the green card test or has not cleared the substantial presence test. However, in case if you are a nonresident alien at the end of the tax year but your spouse is resident alien, then you can be treated as a ‘Resident alien’ for tax purposes. This can be done by your spouse by filing Form-1040 and using the status ‘Married filing jointly’.

When an NRI must file a tax refund in the US?

You should file a tax return when you are engaged or being considered to be engaged in any trade or business in the US during that particular year.

Even when you are not a part of any trade or business of the US but you have income in the US upon which the tax withheld at the source does not seem to be satisfactory.

You should file a tax refund under the below-mentioned circumstances.

  1. When you are willing to claim a return of any excess withholding or tax overpaid
  2. When you are willing to avail of the benefits of any credits and deductions. For instance, you are not involved in business activities in the US but have income from US property which you are considering as effectively connected income.

Which income needs to be reported?

The income of an NRI which is taxable in the US is mainly classified into two categories.

  1. The US source income is fixed, determinable, annual or periodical.
  2. Income which is effectively connected with either trade or business in the US.

Which forms to be filed by NRIs in the US?

Non-resident aliens are required to file their income tax returns by using the below-mentioned forms.

  1. Form 1040-NR, US Non-resident Alien Income Tax Return or
  2. Form 1040-NR-EZ, US Income Tax Return for Non-resident aliens having no dependents.

You will have to fill Form 1040-NR in case of the below-mentioned circumstances.

  1. You are a non-resident alien who is engaged in any trade or business happening in the US.
  2. You represent a deceased person who needed to file Form 1040-NR.
  3. You represent an estate or a trust which had to file Form 1040-NR

For Form 1040-NR-EZ, you must be having income from the various sources in the US in the form of salaries, wages, tips, scholarship or fellowship grants, refunds from State or local income taxes, etc. Moreover, you must not have any dependents for being able to file Form 1040-NR-EZ.


What is the deadline to file Income Tax Refund by an NRI?

  1. In case you are an employee in the US and you receive wages that are subject to taxes under the US tax laws, then you must file your taxes by the 15th day of the 4th month after the end of the tax year. 
  2.  In case, you have an office or you have a place of business in the US then you should file your tax refund by the same schedule mentioned above  i.e. 15th day of the 4th month after the tax year’s end.

Ideally, if you are filing your tax returns as per the calendar year then you must do it by 15th April of the year.

3. In case, you are not an employee who receives wages or you do not have any office/business in the US then you can file your tax return by the 15th day of the 6th month after the end of the tax year.  This means if you are filing your tax return according to the calendar year, you must do it by 15th June.

The Form 1040-NR and 1040-NR-EZ must be sent to the addresses which are mentioned in the instructions of the forms while filing. Suppose, you are not able to file your return by the due date you can request for an automatic extension by filing Form 4868.

Conclusion

Hence, by filing your tax refund on time and in the correct procedure you would be able to avail the benefits on deductions and credit. 

Reference

  1. https://www.irs.gov/individuals/international-taxpayers
  2. https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens
  3. https://www.irs.gov/individuals/international-taxpayers/taxation-of-nonresident-aliens

 

All about filing your taxes in the US: The When, the Where and the How

All about filing your taxes in the US: The When, the Where and the How

by | Feb 1, 2020 | tax filing, tax form, tax returns

All about filing your taxes in the US: The When, the Where and the How

In the US, filing your taxes on time is considered quite important. If you are not filing your taxes on time, then you might have to pay heavy penalties. For avoiding paying heavy penalties, you must know in detail some essential aspects related to taxes.

The major aspects which are related to taxes in the US are

  1. When to file the tax returns?
  2. Where to file the tax returns?
  3. How to file the tax returns?

Let us know about each aspect in details.

a. When to file the tax returns?

In case you are a tax filer as per the calendar year, then the end of a particular tax year for you is on 31st December. In this case, you have to finish your process of tax filing by 15th December of each year. Suppose, you are using a fiscal year i.e. tax year which is ending on the last day of any month but not December then you will have to file your tax returns by the 15th day of the fourth month after your fiscal year has been closed.  In case of the tax return for the year 2019, the tax payment due date is 15th April 2020. 

If you are filing your tax returns by the help of mail, then you will have to ensure that the mailing address to which you are sending the document is correct and the documents are deposited on time. In case of filing a tax return by electronic means, you should ensure that the date and time in your time zone must be accurate as it determines whether your tax filing has been done on time or not.

In case, you are not able to file your tax returns by the due date then you will have to request an extension in the time needed to file the taxes. You can use Form 4868 to obtain an extension of 6 months automatically. For this, you will have to pay interest and also there might be a penalty charged on you for non-payment of tax by the due date.

b.Where to file the returns?

If you are filing your tax return electronically, then you should not be worried about the area where it will be sent. In case, you are filing your tax return by physical means or by paper then you will have to send it to the correct address which is mentioned in the form that you are filling. 

If you have a balance to be paid at the time of filing your tax return, then you can make the payment by IRS Direct Pay. In case you are filing your return by paper, then you will fill Form 1040-V and send your cheque or money order along with the form.

  • The cheque or money order which you are going to send must be prepared as payable to “United States Treasury”.
  • You should not staple your tax return, Form 1040-V and payment together. They should be left loose and placed in an envelope.
  • On the front side of your payment, you should include your name, address, TIN, tax year and the category of form which you are including.
  • It is advisable not to send cash along with your return.

c.How to file the tax returns?

You can file your tax returns either by electronic means or you can mail your tax returns in paper form. Mostly, it is advisable to file your tax returns by electronic means as it is convenient and even a faster process.  When you are mailing your tax return, it will take around six weeks to eight weeks for processing. In case, you are preparing your tax returns by using professional software then there might be the need to pay additional fees to file the return.

If filing tax returns by paper form, you should use the Form 1040 or Form 1040-SR. Along with these forms, you also need to attach some other documents like a copy of Form W-2, Form W-2c which is a corrected form Form-W2, Form-W2G and Form 1099-R if a federal income tax was withheld, etc. 

For electronic filing, you will have to use the e-file method. For this, you can use self-select PIN which will act as your digital signature when you are using tax preparation software. The self-select PIN will allow you to make your electronic signature while filing your Income Tax Return by selecting a five-digit PIN. 

Conclusion

So, you must know in detail about these important aspects associated with filing your tax returns in the US. This basic information makes it easier for you to file your tax returns accurately on time thus avoiding heavy penalties. 

Reference

  1. https://www.irs.gov/taxtopics/tc301
  2. https://www.irs.gov/faqs/irs-procedures/signing-the-return/signing-the-return-0

 

What is the process to obtain the US Individual Taxpayer Identification Numbers (ITINs)?

What is the process to obtain the US Individual Taxpayer Identification Numbers (ITINs)?

by | Jan 31, 2020 | federal income tax, IRS, ITIN, SSN, tax filing, Tax Payers, tax return, taxes, W-7 Form

What is the process to obtain the US Individual Taxpayer Identification Numbers (ITINs)?

US Individual Taxpayer Identification Number is an Identification Number which is used by the IRS (Internal Revenue Service) for the administration required in the field of tax laws. ITIN is a nine-digit number that is issued either by the SSA (Social Security Administration) or by the IRS. ITIN is issued by IRS to those individuals who must have a US taxpayer identification number but do not qualify to obtain SSN (Social Security Number)from the SSA.

Why do you need ITIN?

When you are working in the US and earning in the US, but you do not qualify to obtain an SSN, then the ITIN will be helpful during your filing for tax returns.

Let us find out what does an ITIN does.

  1. If you qualify to obtain a tax refund from the IRS, then ITIN will help you in obtaining a refund.
  2. ITIN will help you to file your taxes and help the qualifying dependents to claim the tax benefits.
  3. Moreover, ITIN can help you to apply for a mortgage loan or open a bank account.

Eligibility for obtaining ITIN

 You should be falling into these below-mentioned categories to obtain the ITIN.

  1. You should be a non-resident alien who needs to file a US tax return.
  2. You must be a US resident alien who has to file a US tax return.
  3. You should be a dependent or the spouse of a US citizen or resident alien.
  4. You must be a dependent or spouse of a non-resident alien VISA holder such as H4 VISA.
  5. You should be a non-resident alien who is claiming a tax benefit.
  6. You should be a non-resident alien student, researcher or professor filing a US tax return or for claiming an exception.

Procedure to obtain ITIN

  • For the process of applying for ITIN, you will need the below-mentioned documents.
  1. Form W-7
  2. IRS Application for Individual Tax Identification Number.
  3. Your federal tax return. But, if you are eligible for an exception then you must provide the supporting documents as well for the exception.
  4. Original documentation from the issuing agency for proof of your identity and foreign status.
  • Since, you will be filing your tax returns in the form of an attachment to your ITIN application you should avoid mailing your filled form to the address which is mentioned in Form 1040, Form 1040A or even Form 1040EZ.
  • You can send your Form W-7, tax return, and other documents either to the mailing address mentioned in Form W-7 or submit it at the walk-in offices of the IRS. You can also get your form and documents processed by an agent who has been appointed by the IRS.
  • These Acceptance Agents are those entities such as colleges, financial institutions, accounting organizations, etc. who help the ITIN applicants in obtaining ITIN. These Acceptance Agents would review the application forms and would forward them to IRS for further processing.

Timeline within which ITIN must be applied

When you are ready to file your Federal Income Tax Return, you should also complete your Form W-7. This needs to be done as the return would be needed to be attached to FormW-7.

If you are qualifying for any of the exceptions, then you do not need to file a tax return. You would only submit Form W-7 along with those supporting documents which provide proof for the exception. An applicant is allowed to apply for ITIN during any time of the year but if you need to attach the tax return to Form W-7 and that tax return is filed after the due date then you might have to pay penalties.

When will you receive your ITIN?

 The IRS usually takes a time of around two months to complete the processing of the ITIN form. If your documents and details are correct, then your form would be processed and ITIN would be sent to your mailing address approximately within two months.

However, if even after 2 months you do not receive your ITIN or any other document/correspondence from IRS then you can call IRS at the Toll-free number and enquire about your ITIN application.

Hence, ITIN is very much necessary for tax return and if you are filing your tax return with an expired ITIN then your request would be processed but you will not receive any tax exemptions or credit claims.

Reference

  1. https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin
  2. https://www.hrblock.com/tax-offices/tax-prep/itin-application.html
  3. https://internationalcenter.umich.edu/resources/tax/getting-itin
  4. https://studyinthestates.dhs.gov/what-is-an-itin
  5. https://www.immihelp.com/itin-individual-taxpayer-identification-number/