How To Handle a Split Tax Return
You’ve just spent hours doing your taxes and the end result is bittersweet. You are due a hefty refund from the federal government, but owe money to your state (or vice versa). You have the dreaded split return. You may even get a net refund considering the two together, but coming up with the amount owed to one level of government is a lot for the checking account to swallow at once. Happily, there is an easy way to handle the split return without straining the family finances.
Step 1: File Your Tax Returns
You want to file your tax return to both levels of government, but differently. File the return to the level of government that gives you a refund as you normally would. Fill in your bank routing and account number for direct deposit, or whatever method of refund you prefer. File the return to the level of government that requires payment taking the option to send the payment later. This should give you the ability to print a voucher that must be sent with payment by the tax deadline in April.
Step 2: Pay Your Bill
Once you receive your tax refund from one level of government, use it to partially or completely pay your bill to the other. If you owe the federal government, you can pay your bill online. Some states also allow for online payment. Otherwise, put your payment via check into an envelope with your voucher and drop it in the mail before the April deadline.
In most cases, taxpayers either owe or are due to a refund from both levels of government. But if you get a split return, you can use the refund from one level of government to partially or completely pay your tax bill to the other. The key is to file your tax return well enough in advance of the deadline to get your refund from one government in time to pay your bill to the other.
What do you think, Clever Friends, have you ever had a split return? Was your taxes due large enough where it was difficult to pay out of pocket? Did you use the refund from one government to pay the bill to the other?