How To: Claim a Tax Repayment
Many taxpayers are eligible for tax repayments as refunds or credits, but in order to claim a repayment it is necessary to follow the correct procedure. Claiming a tax repayment from the IRS or Internal Revenue Service usually involves filling in the appropriate form and making sure that the IRS receives it by the relevant deadline.
Individuals usually need to fill in and return form 1040X in order to claim their tax repayment, after they have made a payment to the IRS. If a corporation needs to claim a tax repayment, they will usually need to use form 1020X instead. The 1040X and 1020X forms are for the amendment of a previous tax return. These forms can be used to change the figures that were given on the tax return, in order to request repayment of tax that has been overpaid. The IRS also has a separate form, form 843, which can be used to claim a repayment or to request abatement of certain types of taxes.
Filling in these forms will be much easier if you take the time to read over them and prepare before you begin. You should read the form to find out what information is required and gather all of the relevant documents and financial records that you will need. It is also a good idea to set aside a quiet time when you will be able to concentrate on filling in the form without having to cope with any distractions. The forms that you are required to fill in to claim your tax repayment are usually relatively straightforward, particularly compared to filling in a tax return. The form will usually require the taxpayer to describe the type of repayment which they are claiming and why they are eligible for it, and to provide details of the tax return that they filed.
Examples of situation in which a taxpayer may be eligible for a tax repayment include overpayment of taxes due to incorrect information having been provided on the tax return, eligibility for credits, deductibles and refunds on taxes, and larger amounts than necessary having been withheld for income and payroll taxes. Withholding calculations are based on information that may be inaccurate or which may change during the tax year, so the amount that has been withheld from a taxpayer's salary is sometimes too large.
There is a stature of limitations on tax payments and repayments. It is not possible to claim a tax repayment more than three years after the tax return was filed, or more than two years after the payment of the tax. The later of these two dates will be taken as the deadline for claiming the tax repayment. The tax repayment that a taxpayer receives cannot exceed the amount of tax that has been paid during the three years between the time when the tax return was filed and the date when the refund was requested. If the refund is being requested after the end of this three year period, but within two years of the payment of the tax, then the refund cannot exceed the amount of tax that was paid in the two years preceding the claim for a refund.
The IRS will usually file a claim for a refund relatively quickly after they have received it. In some cases, the IRS will accept the claim on the basis of the application that has been made, but in other cases, they will investigate the claim in more detail before offering a refund.
It is important for taxpayers to ensure that they claim any tax repayment for which they are eligible, as otherwise they will be missing out on money, which is rightly theirs. In order to ensure that the repayment will be delivered, it is essential to ensure that the IRS has a current address and contact details. The Net4Tax.com website also provides some useful information about taxation.