If you’ve filed your federal income tax return for 2012 and are expecting a refund, you may have gone onto the site “Where’s my refund” and found that your return had been “Accepted” but not “Approved.”
So what’s the difference?
A return that’s been “Accepted” means that it has passed an initial screening, which includes some very rudimentary checks. This can be the fact that no one else has filed a return under your Social Security Number or that there were no other red flags that would have caused it to be rejected. Once your return has been “Accepted” its status will remain the same until it has been “Approved.” This would mean it has been processed and that the IRS has approved the release of your refund.
The problem for many people is that it’s usually 21 days between the time when their returns have been “Accepted” and when they are “Approved,” However, once your refund is “approved,” the site Where’s My Refund (http://www.irs.gov/Refunds) will show you a personalized date as to when your refund will be issued.
Should you call the IRS?
If you have questions about your refund, the IRS advises you to not call them. It says that this would do nothing to speed your refund. The IRS points out that it processes about 140 million tax returns each year and that the people who answer their telephones are not the people who process returns. It says that the best option for people concerned about their returns is to go to one of the sites Where’s My Return or IRS2Go.
Did you use your W-2 as a piggy bank?
When people expect big, fat, juicy refunds it’s usually because they’ve listed fewer dependents on their W-2s than they really have. For example, the husband of a family of four might claim just two dependents to assure that he would get a good-sized refund. However, many financial experts say that this is a mistake. What it amounts to is that you’re lending the federal government money on which you earn no interest. You may have seen a reduction in your paycheck because Social Security and Medicare taxes went back up to 6.2% this year. You could offset this by changing your withholding and claiming your real number of your dependents. Of course, you would not get that nice, big refund the following year but you would have more money to spend this year. Plus, you would not be lending money to the federal government interest-free.
What to do with that refund?
If you do get a big refund, you may be tempted to run out and spend it. Or you could put it into a savings account or certificate of deposit. However, a better way to use it might be to pay off your debts. If you have a credit card debt, the best thing you could do with that refund is to pay it off. For example, if you have a $3,000 debt with a 20% interest rate, you’re probably paying around $152 a month. If you were to use your refund to pay it off, that’s the equivalent of giving yourself a $152 a month raise.