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 a split tax return. You can actually use it to your advantage, reducing the strain on the family finances.
Step 1: File Your Tax Returns
File your tax returns as follows:
- File your tax return to both levels of government as early as possible to ensure they are accepted and processed.
- 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 so the refund is received as quickly as possible.
- 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 payment deadline.
Step 2: Pay Your Bill
Once you receive your tax refund from the level of government that owes you money, use it to partially or completely pay your bill to the other. If you owe the federal government, you can pay your bill online. If you owe your state government money, 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 tax payment deadline.
Special 2021 Note:
Due to the ongoing COVID-19 pandemic, the federal government has extended the deadline to file and pay your taxes to May 17th. In order to simplify tax season, many states have also extended their deadlines as well. Make sure you know what your state tax deadline is.
In most cases, taxpayers either owe or are due to a refund from both levels of government. But if you have to handle a split tax 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?
Check out additional articles on Clever Dude:
- 6 Pieces of Information You MUST Have Before Doing Your Taxes
- Taxes Season: What Should You Do If You Can’t Pay Your Taxes?
- Four Steps to Knocking Out Your Taxes Quickly