What to Expect After Filing Your Tax
Understanding your tax bracket
How much you pay in tax depends partially on your income bracket. The U.S. has seven marginal tax brackets that range from 10% up to 37%. Each income bracket features a lower and upper limit (in other words, margins). You simply pay the rate on the quantity of your income that falls within that bracket.
For example, on 2020 taxes, single filers pay 10% on their first $9,875 and 12% on every dollar they earn between $9,875 and $40,125. So if one filer has an income of $40,000, they pay a tenth tax on $9,875 of it then 12% on the remaining $30,125. you'd say this tax filer is within the 12% income bracket. Not all of their income is taxed at 12%, but that’s the very best marginal rate they pay.
The tables below show the 2020 tax rates and the income ranges they apply to.
tax bracket table from fortune.com / source:IRS
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Yes, learning how much taxes take out of your paycheck kind of sucks. But on the bright side, there are tax return refunds! As discussed earlier in the basics of tax filing, most people end up overpaying their taxes. So they usually receive a tax refund after filing. Now we can discuss something happier!
Getting a refund
Most of the people will get their refund within 21 days of the IRS receiving your return. However, it's going to take longer when tax season starts and around the Tax Day deadline. That’s when most of the people file, therefore the IRS may process returns more slowly.
E-filed returns with a direct deposit option through a checking or bank account are usually the fastest to process. Sending a paper return or getting a paper check takes longer. The table below lists some general guidelines and when to expect a refund.
The estimated refund schedule for federal income taxes:
How to check the status of your refund
The IRS allows you to see the status of your refund on the IRS website or by downloading the IRS2Go app on your mobile device. Your status is usually available 24 hours after e-filing. You need to enter your SSN or ITIN, your filing status, and your exact refund amount.
Friendly reminder not to get too excited and impulse shop after getting your tax refund/return. Spend it wisely and don’t buy unnecessary things like this:
Paying your bill
If you need to pay the IRS, you'll send it electronically through whichever online filing service you used. You'll need to create a web IRS account. If you already have an IRS account (such as for creating income tax payments), you'll pay through there. You can also mail a check to the IRS. The right mailing addresses for payments are within the instructions of Form 1040.
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What if you miss the tax return deadline?
The failure-to-file penalty applies once you don’t file your return by the deadline. It’s 5% of your unpaid taxes and it accrues monthly, starting the day after the filing deadline until it reaches the maximum of 25% of your unpaid taxes. This penalty only applies if you owe the IRS money. If you don’t owe any taxes, meaning you’re expecting a tax refund, there's no penalty for filing late. (You need to file within three years otherwise you forfeit your refund.)
The failure-to-pay penalty applies if you don’t pay your full bill by the filing deadline. It’s worth 0.5% to a quarter of your unpaid taxes and accrues monthly. The most penalty is 25% of your unpaid taxes.
If you have to pay both of the above penalties, the most combined penalty that you’ll pay monthly is 5% of the unpaid taxes.
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Filing taxes doesn’t need to be stressful once you get the hang of it. Once you have your information prepared, you can go through the process easily. Remember it’s always good to file your taxes early to get faster tax refunds, extra time to pay taxes you owe, and more accurate returns (potentially resulting in larger refunds). So make it a good habit and enjoy a happy tax day!
Disclaimer: This article is written for the 2020-2021 tax year
Edited by Vanessa Wong
Guest Author Spotlight: Joyce Lam
Joyce is a Tax Site Supervisor for VITA program at IRS. She is also a founder of Kaimore, a nonprofit that promotes economic mobility by providing targeted professional development services for those who are underprivileged.
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