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% 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?” Infrequent reasons for a slow return include temporary issues like a government shutdown or a change in the tax code. In most cases, though, it’s caused by something else. Read on to find out the most common reasons for a tax refund delay.
What You Need to Know
- How Long Does It Take To Process a Tax Refund?
- 8 Reasons Why Your Tax Refund Could Be Delayed
- You Filed a Paper Tax Return
- You Claim the Earned Income Tax Credit or Additional Child Tax Credit
- You Provide Incorrect Direct Deposit Information
- You Input the Wrong Identifying Information
- Your Individual Taxpayer Identification Number Has Expired
- You Owe Money to the Government
- You Make Mistakes on Your Tax Return
- You Made an Amendment on Your Tax Return
- When To Contact the IRS If Your Return Is Delayed
- Making the Most Out of Your Tax Return
With the average American tax refund totaling $1,949 for 2018’s tax year, it’s no surprise that you’d want to know how quickly yours should arrive. According to the IRS, it takes about 21 days for the average federal tax refund to be issued, assuming you e-file and opt for direct deposit.
Your state tax refund varies depending on where you live. You can expedite both the state and federal tax process by e-filing early on in the year. By avoiding a tax return delay, you give yourself more flexibility in how you spend (or save) that extra cash.
From the way you file your tax return to the information you include, there are multiple potential reasons for a tax refund delay. Here are eight of the most common culprits:
E-filing has the fastest processing time. Consequently, sending in a paper tax return can slow down the process exponentially. Just how much slower is the paper filing? Instead of the 21 days it takes when you e-file, sending it by mail comes with a wait time of six to eight weeks from the time the IRS receives your return. If you opt for a check over a direct deposit, you’ll also need to wait for your refund to arrive in the mail. Not only is direct deposit faster, but it’s also a safer way to protect your tax return.
The IRS previously announced that if you claim either the Earned Income or the Additional Child Tax Credit, the earliest they will issue your refund is Feb. 15. They did this to give the IRS enough time to prevent identity theft, according to 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.”
The future impact of this rule isn’t finalized yet, but if you claimed one of these credits, this could be the reason for your tax refund delay.
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 didn’t enter your routing and account numbers accurately, 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.”
The simplest mistakes can cause a late tax refund. If you enter the wrong identifying information, you can subject yourself to an unnecessary tax refund delay, which can leave you wondering about the status of your tax return. 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,” Hryck said. A mismatch can significantly delay your return, he said.
Zimmelman said the mismatch could 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. Not only does checking for mistakes help speed up the refund process, but it also helps you avoid inadvertently committing tax fraud.
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 “83” through “87,” 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 might be too late to have the process expedited. According to the IRS, 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 you renew your ITIN, you will be on the hook for all interest and penalties related to the disallowed exemptions and credits.
If you owe certain types of debt, the Treasury Department’s Financial Management Service will apply your refund to those debts rather than pay it to you. If your debt equals or exceeds the amount of your refund, you could lose your entire 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 the IRS takes some or all of your tax refund — technically known as an “offset” — you will receive a notice from the Financial Management Service (FMS) that shows the amount you were supposed to receive and how much they took. 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.
This point also drives home why it’s important to make sure you don’t get too big of a tax refund each year. That means you’re paying too much out of your paycheck month by month. Changing your W-4 form is an easy way to remedy this problem.
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,” Zimmelman said. “It may result in a slight delay, but the tax return probably won’t be rejected.”
However, more serious mistakes can cause long 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,” Zimmelman said. “More major errors may result in your needing to re-file your return by mail.”
So, your refund can also be delayed if the IRS selects your return for further review. 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.
If you make a mistake on your tax return, you can file an amendment, which you can do by filling out IRS form 1040X. The downside that comes with completing an amended tax return is that if you’re expecting any money back from the government, you’ll be waiting for a while. The IRS says that it takes up to 16 weeks to process amended fillings.
Luckily, the IRS makes it easy to keep track of what’s happening with your tax refund. You can check your status online or download the IRS2Go mobile app. You should only call the IRS if it’s been more than 21 days since you e-filed, more than six weeks since mailing your return, or if the online “Where’s My Refund” tool requests that you reach out.
Avoid a tax refund delay by making sure all of your information is correct before you send anything to the IRS and your state taxation department. If possible, you should also take advantage of the fastest filing methods: electronic filing paired with direct deposit. Pairing them together ensures that you get your money back into your bank account where it belongs. Then you can figure out what to do with it — as long as you avoid these common mistakes.
Click through to read more about outrageous ways real people spent their tax refund, so you can avoid repeating their mistakes.
More From GOBankingRates