7 easy steps to an early tax refund

4. Analyze the numbers

Sometimes, the raw numbers you have are going to be wrong.

On the income side, you're required to report any and all interest and dividends received, even if you don't receive a Form 1099.

You'll have to match up the sales of stock with the cost of those shares. The number shown by your broker on Form 1099 B is only the sale price. You're not taxed on 100% of that number. You reduce it, on Schedule D of your return, by your cost, including broker's fees. You're only taxed on the net profit.

If you don't sell 100% of your position, you'll have to allocate your costs on a per-share basis.

On the deduction side, you may have deductions not reflected by the raw data.

Say you make your Jan. 1, 2010, mortgage payment on Dec. 31, 2009. The interest you paid won't be reflected on the Form 1098 sent by your mortgage company. That's because they didn't get the check or the online payment until 2010. (If you pay online, be sure your bank records the date that you send the payment properly. A canceled check is still adequate proof.)

Paying before the end of the year transforms your January 2010 payment into a 2009 deduction, and you should run an amortization schedule to compute the additional interest. That additional interest would be shown on line 11 of your Schedule A.

(You can make the same tax move at the end of 2010, converting what would normally be a January 2011 payment into a 2010 deduction.)

5. Call your accountant

If you're going to have your return professionally prepared, call your accountant now for an appointment.

I know, you're her favorite client. But if you want an appointment tomorrow, you better call her yesterday.

In any case, once you've made that appointment, you've made a commitment to get that return done. And that means you've committed to get ready yourself. Just make sure you've got the numbers in order when you show up. Your wallet will appreciate it.

6. Put ink to paper

At least open the tax program on your computer. You've got your numbers. If you're doing your own return, put ink to paper. Go to your quiet place and actually do your return.

You've done the real work. Now you're just putting numbers in boxes. Relax; this is really the easy part. Remember, we started with how to get your refund faster.

7. Mail your return

A completed return on your desk that calls for a refund is the IRS' idea of heaven. It's your money. Don't leave it with the IRS. It's bad enough that they've held it all year without paying you any interest on your excess payment. Don't compound the pain by delaying the mailing.

Of course, the best way to speed up your return is to e-file. About 141.4 million tax returns were e-filed in 2009, down from 153.7 million in 2008.

The IRS appreciates the cost savings and claims it expedites your refund. The IRS is offering what it bills as a free e-filing service. It's not quite free. You may still have to pay a "transmitter" to convert your return into IRS code and send it on.

In either case, electing a direct deposit of your refund will always get it into your hands faster than snail mail. About 73 million taxpayers used direct deposit for their 2009 refunds, up from a year earlier.

Complete lines 73(b), (c) and (d) of your Form 1040, and, coupled with an e-filed return, in theory you could have your refund in your bank account in as little as 24 hours.

Alternately, the IRS now has a Web tool called "Where's My Refund?" that can tell you whether the IRS received your return and whether your refund was processed and sent to you.

You can get more information on the refund tool here. It also has a refund-assistance line, 1-800-829-1954.

Updated Nov. 25, 2009

< previous |  1 | 2 |