With 2012 coming to a close (Happy New Year!), now might be an important time to take a look at your financial life. There are few better times to review all of your spending, investing, and income habits than the end of the year.
One question many might have, especially with the continued craziness in Washington DC, is what exactly their tax refund might be for 2012. According to the IRS, most Americans do overpay on their federal income taxes during the course of their payroll deductions throughout the year. Many overpay, effectively giving Uncle Sam an interest free loan for the course of the year.
Since so many do get money back, now might be a good time to check through your financial records from 2012 and get excited about the potential refund (or at least prepare for the bad news on what you owe). Getting a rough estimate of this refund is very easy thanks to Turbotax’s free taxcaster online.
Simply plug in your information and in just a few minutes the program will project what your refund will look like. All you really need is a copy of your last paycheck, since this will contain your yearly income. Also helpful are any of your major deductions, like a statement from your bank that says what your home interest payments were, or returns from your investment accounts on how much interest or dividends your received during the year.
Be careful when inputting your income that you deduct all of the relevant items like health insurance payments, 401(k)/403(b) deductions, and any other tax deductions. If you do this improperly you will not get an accurate number.
This leads to a larger point: none of this is official and you will be largely working off of information that is different from what you will get as “official” tax information at the end of January. Still, it can give you a pretty rough guide, and let you plan.
Perhaps most importantly, if you are anticipating a large refund, it is probably best to start filling out a rough return on turbotax.com and then update as official information and statements come in. This way, once you have all the relevant forms, you can get your refund as early as possible. There is absolutely no sense waiting until April to get your refund, it’s your money now!
On the other hand, if you do owe money to the government, then it does make sense to wait those extra three months, so this is just as useful of an exercise.