Preparing taxes Ideas

Preparing taxes is nobody's idea of a good time, but for most taxpayers, there's a payoff: a sizable refund check. This year, though, residents of several states will have to wait up to five months to receive their state tax refunds because of budget shortfalls.

The federal government hasn't run out of money at least not yet. Still, at a time when many people need their refund checks to pay the bills, some taxpayers' federal tax refunds have been delayed.

Taxpayers who file their federal tax return electronically and arrange for direct deposit typically receive their refunds in about two weeks, the IRS says. But here are some reasons your federal tax refund could arrive later than expected:

You failed to claim the Making Work Pay credit.
Of the 60 million individual tax returns filed by early March, more than 2 million contained an error related to this credit, the IRS says.

Last year's economic stimulus package provided most taxpayers with a tax credit of $400, or $800 for married couples. The IRS adjusted its withholding tables so the credit was spread out through the year.

But when you file your tax return, you need to claim the credit on Schedule M, says Michelle Eldridge, a spokeswoman for the IRS (tax software programs will do this automatically). This is particularly important for taxpayers such as workers who are self-employed who didn't receive the credit through withholding, or only received a partial credit.

You received a Making Work Pay credit and an Economic Recovery Payment.
As part of the stimulus package, Social Security beneficiaries received a one-time Economic Recovery Payment of $250. Since the maximum a taxpayer can receive from both programs is $400, those seniors will have to reduce their Making Work Pay credit by the amount of their Economic Recovery Payment. Failure to do this could hold up your refund.

If you're not sure whether you received the $250 payment, you'll have to check your bank records. The IRS didn't send out a notice about the payment, and neither did the Social Security Administration. The Treasury Department delivered the checks last year in the same manner Social Security beneficiaries received their regular benefits. If you received your Social Security benefits through direct deposit last year, your check went directly into your bank account.

You claimed the home buyer's credit.
Taxpayers who were first-time home buyers in 2009 are eligible for a tax credit of up to $8,000, while repeat buyers are eligible for a credit of up to $6,500. That's a nice benefit, but you may have to postpone buying those window treatments.

Taxpayers who claim this credit are required to attach a copy of their settlement statement to their tax return. That means they must file their return by mail instead of electronically. Congress added this requirement last year in response to reports of widespread fraud in connection with the credit.