by Edwin Ivanauskas | Tags: Personal Finance, Investing

It is that time of year again where you either get excited because Uncle Sam owes you money for the tax's you paid or it is the other way around and you are dreading April 15th because you owe taxes. Every year people decide if they should try and do their own taxes or if they should let a professional do it for them. If you are a U.S. citizen then you must file taxes.

How tax refunds work

When you work all year long at your job, you have tax's taken out by the government. Depending on how many dependents that you chose to claim on your w-2 when you were hired in depends on how much tax that the government takes out. At the end of the year when you file your taxes, the government looks to see if you first paid enough taxes. If you paid enough taxes then the government will check to see if you paid more than you had to. If you paid more than you had to you will receive a refund. If you didn't have enough tax's taken out then you will owe the government the difference.

Three ways to file

Paper file - If you choose to do your own tax's and send them off through the mail, then this is called paper file. If you paper file early then you can expect your return within a couple of weeks. If not, then you will not receive it for at least six to eight weeks. This is considered the slowest way to file.

E-File - if you choose to have a professional do your taxes then they will offer the opportunity to e-file for your tax refund. When you do this, you have the option of trying to receive a loan for up to half of your tax refund that day. A professional tax preparer has a bank that they use to give you the option of having basically a loan given to you based on your tax refund. If they (bank) approves you for this type of loan, you will receive half of your tax refund that day and the other half the next day. There is a fee that the bank will charge you for this service as well as a fee that the tax preparer will charge as well. Most people will pay a fee of at least a hundred dollars which will be taken directly out of their tax refund. If the bank does not approve your loan request based on your tax's then you can also receive it directly within two days or the option of a week later. If you wait for the week and receive your check, you will not be charged a fee for getting it through the bank.

Direct deposit - You can also have your tax's deposited directly into your checking or savings account. This usually takes up to a week after taxes were filed.

Remember that the closer to April 15th that you get, the longer it will take to get your refund. You can also have your tax refund applied to next years to save you money in the future.

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