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7 Reasons Your Tax Refund Could be Delayed
Feel like you’ve been waiting forever to get your tax refund? You could just be impatient or it could be a sign of a bigger issue. Luckily there are some easy ways to check if you’re wondering where your refund is. And you can leave here understanding the seven reasons why there might be a delay.
|Filing Method||How soon can you check your tax return status?||When can you expect your tax refund?|
|e-file||24 hours||Usually within 21 days|
|File by mail||4 weeks||6-8 weeks|
If you want to know the specific day you can expect the IRS to send your refund, Forbes has a helpful chart of refund timing by filing day.
The IRS states that they issue most refunds within 21 days. If you get your refund through Direct Deposit, you’ll get your refund the day the IRS issues the refund. In 2017, many filers received their refunds in as little as 14 days. But those results are not guaranteed and certain issues and factors can delay your refund.
The IRS officially opened this 2018 income tax season on January 28, 2019. If you got a jump on your taxes and e-filed on January 28th, you should receive your refund by February 18. You can check the status of your refund through the IRS website. Just follow the instructions below for How to Check the Status of Your Refund.
However, just keep in mind that the IRS doesn’t guarantee you will receive your refund by a certain date after you file. So, although they say you can expect your refund in 21 days, that’s just the target they aim for; it’s not a promise you can hold them to.
And keep in mind that this is the agency’s first year operating under the full scope of the new tax reform law. Thus, refunds could be delayed if there are any issues the IRS encounters in this first filing season.
In the past, IRS employees have always been considered nonessential federal staff. Thus, the IRS usually operates with a skeleton staff during most government shutdowns. In 2011, the Office of Management and Budget (OMB) also ordered that the IRS would not issue any tax refunds during a government shutdown.
However, the OMB gave the IRS the authority to call back their workers even before the shutdown ended. And they assure taxpayers on their website that they’re still committed to providing refunds within their 21-day window.
So, until evidence shows otherwise, you can still expect your tax refund in 2019 within 21 days of filing.
While refund checks seem to be getting delivered on time in 2019, that doesn’t mean that taxpayers who filed early are happy. In fact, many taxpayers are getting hit by surprise tax bills this year, instead of getting a check. According to reports on news outlets from Vox to NBC News, some early income tax filers aren’t receiving the refund checks they expect. In fact, people who made the same income as last year that had no changes and claimed a standard deduction are still finding that their refund checks are much smaller. Some taxpayers ended up not receiving checks at all or, even worse, getting a bill from the IRS because they owe money.
That’s because income tax withholdings were adjusted by the IRS after the 2017 Tax Cuts and Jobs Act went into effect. This happened last February. The positive side of the adjustment was that you may have seen a boost in your take-home pay. But the downside was that many people’s withholdings were adjusted too much. As a result, it cut huge refund checks that people have come to expect. What’s worse, some people were adjusted so much that they have ended up owing back taxes instead of getting a refund.
The bad news is that if your withholding was off, there’s not much you can do about it now. Your refund is what it is this year and it may not be as much as you expected. But you should adjust your payroll tax withholding now to fix your refund for 2019 income tax season next year. And this is even more imperative if you end up owing money this year.
The IRS makes it really easy to check your refund. They have three options:
If you file income taxes online, you’ll need to wait 24 hours before they will give you a status. If you file by mail, wait four weeks. The information updates each day and you can check as often as you like online or through the app.
The IRS allows you to track from when they officially acknowledge they received your return to when they finally send your refund.
Here are the statuses you can expect to see:
If you count down and see your refund is late, follow the instructions to check the status of your return. If the status doesn’t move from return received to refund approved, then it may be a sign of a bigger problem. You may also be in a situation where the IRS says they sent your refund, but you don’t receive it.
Here are seven reasons why you may face an IRS tax refund delay.
If there are discrepancies between what you report on your return and what businesses report, it could delay your refund. Businesses also file taxes and report how much they pay employees, freelance contractors, and other owner-only companies. If the income you report doesn’t match, that’s a problem.
And realize that this doesn’t always happen intentionally. You could just make a clerical error, but it can still create a big hassle and lead to an audit. This is why Debt.com recommends working with a tax professional or at least use tax preparation software.
Issues with tax returns can also happen other than by accident. If you know that you should owe taxes and intentionally misreport it to avoid back taxes, it’s tax fraud. And your return may be under investigation and headed for an audit.
You may not even be aware of potential issues yourself. If your spouse files your taxes and either commits fraud or incurs tax debt without your knowledge, you can apply for innocent spouse relief. This will get you out of any IRS penalties, owing back taxes and potential court charges related to your return.
But IRS audits can go back up to three years. So, even if you received a refund on your 2016 or 2017 income tax returns, you could potentially still get audited. This is one of the reasons that it’s recommended you should keep three years of tax returns and receipts. That way, if you face an audit, you’re not scrambling to find your paperwork.
And this year, because of the current government shutdown, no auditing is happening at all right now. The IRS has confirmed that tax season will start on January 28 and refunds will be issued. However, all audits are on hold. That means no taxpayer will receive an audit on a 2018 tax return until the government reopens.
If someone gets their hands on your Social Security number, they can commit tax identity theft. This is where someone else files a return in your name and gets your refund. When you try to file, the IRS usually informs you that they already received your return and sent your refund.
The risk of tax identity theft increases the later you file. If you wait until the last minute (or always file extensions), you face a greater risk of tax ID theft.
Garnishment doesn’t just refer to wage garnishment, there’s also something called a tax intercept. This happens when a government agency orders the IRS to garnish your tax refund. This can happen for a few reasons:
Basically, any unsecured debt that you incur through contact with the federal government could result in a tax intercept. Unsecured debts refer to any debt that’s not backed by collateral, which includes anything from student loans to court fines.
Federal student loans in default are the most common reason for tax intercepts. If any government-backed student loan lapses into default and you ignore communications from the loan servicer, the D.O.E may order the tax intercept. This is one reason why it’s crucial to work to find a solution for your federal student loan debt.
Not every reason for a delayed tax refund is as dramatic as the ones we list above. Sometimes it’s a simple clerical error. If you use Direct Deposit for your tax refund, the delay may be a routing number issue.
Direct Deposit requires two numbers:
If you put down either of those numbers wrong, you won’t receive your refund. First, check the status of your refund. If it says the refund was already sent, contact your financial institution. They may be able to locate the funds and return them to the IRS. Then the IRS will issue you a paper check by mail (which means more waiting for your tax refund).
If your bank can’t locate the funds, then you must file Form 3911 with the IRS. It’s basically an official statement that you have not received your refund. It starts the process that will hopefully result in the IRS issuing you a paper check by mail.
The new tax reform law requires the IRS to delay disbursement on any refunds that claim two key tax credits. The IRS cannot send cut you a refund check until after February 15 if you claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC).
So, if you file early and claim either of those credits, you may not get your Direct Deposit within the normal 21 days. The earliest you could expect your Direct Deposit would be February 27 and it could take up to March 8.
If you file extremely early (i.e. January 28) OR extremely late (i.e. April 15), then your refund may be delayed due to the sheer volume of returns the IRS receives. Returns received during peak filing windows tend to take longer to process because the IRS simply lacks the manpower to process everyone’s returns at once. The peaks occur at the start of tax season and on the last day to file.
In this case, you just need to be patient. Use the IRS tools to make sure your return is getting processed and that your refund gets sent. This delay should only take a few days over the target 21 on Direct Deposit.
As you can see from the timeline for tax refunds, processing on paper returns and cutting paper checks take longer. Snail mail is simply slower than electronic processing, so it takes longer for the IRS to receive your return AND get you your refund.
You need to wait for one month just to check the status of your return. That means the earliest you can start checking is February 28 if you send your returns in on the first day of tax season this year. You shouldn’t expect your refund until mid- to late-March. And that’s only if you file on the earliest date possible.
This is a big advantage for electronic filing. So, if you need to get your refund fast this year, then you need to e-file. If you use a tax preparer, almost all of them e-file, but ask your preparer, just to make sure.
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Article last modified on May 30, 2019. Published by Debt.com, LLC