The federal income tax is a "pay as you go" levy, which means you're required to pay taxes as you earn money throughout the year. Self-employed workers make estimated tax payments. For employees, the employer withholds tax money from each paycheck.
Sometimes, people pay more in taxes than they owe over the course of the year. When they file income tax returns, they are entitled to a tax refund.
Usually, the quicker you file a return, the sooner you get a tax refund. According to the IRS, more than 90 percent of tax refunds are issued in less than three weeks. You can get your refund faster if you e-file your return and use direct deposit.
But perhaps your refund has been delayed. That could leave you wondering, "Where is my tax refund?" Following are six reasons your tax refund is a no-show.
1. You Claim the Earned Income Tax Credit or Additional Child Tax Credit
The IRS previously announced that if you claim either the Earned Income Tax Credit or the Additional Child Tax Credit, your refund would not be issued until Feb. 15 at the earliest. This was done to allow the IRS enough time to prevent identity theft, said Josh Zimmelman, owner of New York-based Westwood Tax & Consulting.
"The only thing a taxpayer can do to avoid this delay is to not claim the EIT or ACT credits," he said. "But if you are truly eligible for these credits, then you deserve to claim them. The only thing you can do is file as you normally would and wait."
Now that Feb. 15 has passed, though, your refund should be on the way. However, the IRS has told taxpayers not to expect to see their refunds until the week of Feb. 27 at the earliest.
2. You Provide Incorrect Direct Deposit Information
Direct deposit has its perks. Usually, opting to have your refund directly deposited into your bank account speeds up your tax refund because you don't have to wait for the check to arrive in the mail. However, if you don't enter your routing number and account number properly, you're likely to be on the receiving end of a late tax refund.
"A minor mistake within (an) account or routing number can definitely cause your tax refund to see a sizable delay of a few weeks or over a month," said David Hryck, a prominent tax lawyer and personal finance expert with the law firm of Reed Smith in New York. "If the direct deposit info is incorrect, the IRS is going to issue you a paper check once the deposit has been rejected. From there, you will be issued a check. All of this can take several weeks."
But, that doesn't mean you should opt out of direct deposit. "Direct deposit is definitely a way to get your tax refund the fastest," Hyrck said. "So when utilizing, make sure to verify all of your info prior to processing."
3. You Input the Wrong Identifying Information
The simplest mistakes can cause a late tax refund. If you enter the wrong identifying information, you can subject yourself to an unnecessary delay of your tax refund. Such information includes errors in:
- Your name
- Your spouse's name
- Your kids' names
- Any Social Security numbers
"Part of the IRS process for verifying tax return information is verifying that your Social Security number and your name on the return matches the information in the Social Security Administration's database," said Hryck. A mismatch can significantly delay your return, he said.
Zimmelman said the mismatch can also cause delays on the bank side. "If the name and Social Security number of the taxpayer doesn't match that of the account holder, the bank will reject the transaction and they will not be able to deposit the refund to that account," he said.
Besides double checking your entries before you file, you can use electronic filing to help prevent mistakes, as such software automatically checks for common errors.
4. Your Individual Taxpayer Identification Number Has Expired
If you file a tax return using an individual taxpayer identification number (ITIN), make sure your ITIN has not expired before you file your return. If an ITIN hasn't been used in the past three years, it expires. However, if the middle two digits of your ITIN are either "78" or "79," your ITIN expired on Jan.1 of this year and needs to be renewed. That is true even if you used it in the prior three years.
Use Form W-7 to renew your ITIN as soon as possible, although it's probably too late to have the process expedited. The IRS said it usually takes approximately seven weeks for an ITIN renewal to be processed. However, if you are applying during the peak season — which runs from Jan. 15 through April 30 — it can take up to 11 weeks.
If you file using an expired ITIN, the IRS will process your return, but disallow all exemptions and credits related to the expired ITIN. You will receive a notice that the ITIN has expired. Until the ITIN is properly renewed, you will be on the hook for all interest and penalties relating to the disallowed exemptions and credits.
5. You Owe Money to the Government
If you owe certain types of debt, the Treasury Department's Financial Management Service will apply your refund to those debts rather than paying it to you. If your debt equals or exceeds the amount of your refund, you could lose all of your tax refund.
These debts include money owed to the federal government, such as back taxes or federal student loans. They also include certain types of personal debts, including child support.
"If you owe money, the IRS can subtract that debt from your refund and if the debt is greater than your refund, you won't get anything back at all," Zimmelman said.
If some or all of your tax refund is taken — technically known as an "offset" — you will receive a notice from the Financial Management Service that shows the amount you were going to receive and how much was taken. It will also show which agency received the offset amount. If you don't think the offset is correct, contact the agency that received the money.
6. You Make Mistakes on Your Tax Return
If you make mistakes on your return, your refund will likely be delayed. The significance of the delay depends on the type of error. "If you made a computational error, the IRS will usually correct that for you," said Zimmelman. "It may result in a slight delay, but the tax return probably won't be rejected."
However, more serious mistakes can cause longer delays. "If you realize you've made an error on your filing status, number of dependents, deductions, credits or total income, you can file an amended return," said Zimmelman. "More major errors may result in your needing to re-file your return by mail."
So, your refund can also be delayed if your return is selected for extra review by the IRS. If you've filed your return and are left wondering "Where's my tax refund?" you can always check the status online. In addition, by following the tips in this article, you can minimize the chances that you will have a late tax refund.