Why There’s a Delay in Your Tax Refund

The Internal Revenue Service (IRS) is currently facing a significant backlog. Despite processing over 91 million individual returns and issuing over 68 million refunds, the agency still has more than 29 million returns awaiting manual processing. If you’re one of the many Americans wondering about the status of your tax refund, you’re not alone.

The delays are primarily due to staffing shortages and processing challenges exacerbated by the pandemic. Additionally, recent tax changes following the transition to a new presidential administration have added to the workload. Apart from internal IRS issues, there are various reasons why your tax refund might be delayed, some of which may be self-inflicted.

Let’s begin with the most straightforward option. The IRS provides several methods for checking your refund status. You can visit their website or use the IRS2Go mobile app or desktop version. You’ll need your Social Security Number (or Individual Taxpayer Identification Number), your filing status, and the exact refund amount as stated on your tax return.

The IRS advises against calling them to inquire about your refund due to staffing limitations. However, if the Check My Refund Status tool prompts you to call, then it’s appropriate to do so. Whatever you do, avoid filing a second tax return, as this can trigger alarms in the IRS system and further delay your refund.

Incomplete information is a common reason for tax refund delays, according to the IRS. Simple errors like missing ZIP codes, unsigned forms, or omitted entries can cause significant processing delays and hinder the issuance of refunds.

Before filing your tax return, it’s crucial to thoroughly review all information. Check each box, line, and calculation for accuracy. If you’re using tax software, it will likely catch most errors for you. However, if you’re submitting a paper return, ensure it’s legible and fully completed. Any discrepancies or omissions could result in delays processing your refund.

Embrace the convenience of digital financial transactions, which represent the present and future of financial operations. If the IRS possesses your banking details, they can swiftly deposit your refund directly into your checking account. This method ensures a quicker receipt compared to waiting for a paper check in the mail, and it eliminates the risk of theft or loss associated with physical mail.

However, if the IRS lacks your bank account information, the refund process may take longer. Traditional mail delivery is slower than electronic transfers and susceptible to various delays, including weather conditions, postal disruptions, or logistical issues. To expedite your refund, it’s crucial to ensure the IRS has accurate banking information on file. If you’ve recently changed banks or account details, updating this information with the IRS is essential. Failure to do so could result in the IRS attempting a direct deposit, only to have it rejected due to outdated information, leading to additional processing time for issuing a paper check.

If you have outstanding taxes owed to the IRS, any expected refund will be offset against that debt. This means you may receive a smaller refund than anticipated, or none at all. It’s crucial to monitor and settle any overdue taxes promptly to avoid further financial consequences. Delinquent taxes accumulate interest and penalties, exacerbating your financial burden and potentially reducing future refunds.

It’s not only federal taxes that could impact your refund; state taxes may also be withheld under certain circumstances. Additionally, other outstanding debts may affect your refund, as we’ll discuss shortly. Remember, these debts won’t go unnoticed by tax authorities, so resolving them is paramount to reclaiming your refund. If you’re uncertain about owing back taxes, it’s advisable to contact the IRS directly for clarification, particularly if you suspect an error.

The IRS typically aims to issue refunds within 21 calendar days after receiving your return. However, this timeline doesn’t account for potential delays stemming from the U.S. Postal Service. Given the prevalent mail processing issues, exacerbated by ongoing USPS cutbacks, your refund might be stuck in a mail backlog.

Recent reports indicate that approximately one in five pieces of mail in the U.S. experienced delays in the first quarter of 2021. If you opted for a paper check refund, you may encounter delays due to postal service challenges. To determine the status of your refund, verify with the IRS that it has been processed and sent to the correct address. If confirmed, your refund is likely navigating through the postal system. In such cases, patience is key while awaiting its arrival.

The IRS strongly encourages taxpayers to file their tax returns electronically and opt for direct deposit to receive owed funds faster. This method offers the quickest and easiest route, leveraging the widespread availability of user-friendly electronic devices and internet connectivity across the nation. Failing to embrace this digital approach could needlessly delay your refund.

As a general rule, those who submit paper tax returns face significantly longer processing times, including delays in receiving any refunds. According to the IRS, it may take up to eight weeks for a refund to be issued for paper returns. To expedite your refund, it’s best to avoid traditional methods and utilize popular tax software options (including free ones) while opting for direct deposit into your bank account.

Your tax refund isn’t just at risk from back taxes; it could also be redirected towards what’s termed “Other Debts.” Despite the rather uninspired label, these encompass various outstanding obligations, such as overdue child support payments, federal student loan debt, unpaid state income taxes, and repayments for improperly received unemployment benefits.

If any of these debts are on your record, anticipate a deduction from your refund accordingly. Unsure about your situation? The IRS can provide clarity regarding whether your refund was diverted to settle any outstanding debts. It’s crucial to understand that the IRS won’t seize your tax refund to offset student loans that are in good standing. As long as you’re meeting your repayment obligations, your refund should arrive as expected.

Even in the absence of identity theft or fraud, the mere suspicion of such illegal activities can trigger security measures by the IRS, leading to delays in your refund. If the IRS detects anything unusual, they may request additional verification of your identity and information. This often involves sending you a Form 5071C for confirmation. It’s crucial not to overlook such requests.

While these security checks are essential, they can result in significant delays. Many U.S. states also implement their own protocols to delay tax refunds as a precaution against tax-related identity theft or refund fraud. If your refund seems stuck in limbo, contacting your state’s Department of Revenue or Office of the Tax Commissioner can shed light on whether your state tax refund is delayed due to security reviews.

Experiencing a delay in your refund if you’ve filed the injured spouse allocation form (Form 8379) is not uncommon. This particular tax scenario can extend processing times to at least 14 weeks. The purpose of filing this form is to reclaim your portion of a previous joint tax refund that was seized due to your spouse’s outstanding debts, which could include past tax obligations, child support, or federal loans (especially student debt).

In this context, “injured” doesn’t refer to physical harm but rather to the spouse who didn’t receive their share of the tax refund due to their partner’s outstanding debt. It’s a complex financial circumstance. Additionally, certain states categorized as “community property” states operate under different regulations to determine whether an injured spouse remains entitled to any refund amount.

The primary cause of delayed tax refunds often stems from a pending audit. If your return is in order but you haven’t received your refund within four weeks, it’s prudent to brace yourself. There’s a likelihood that your file has been forwarded to the IRS Audit Department. This entails a thorough examination of your finances, potentially leading to challenges, reductions, or even nullification of your refund.

Fortunately, IRS audits are relatively rare, affecting only about 0.6% of individual tax returns annually. The odds of being randomly audited are exceedingly low. However, if your return is selected for an audit—whether randomly or due to flagged issues—the processing of your refund will be postponed until the audit concludes. For further details on the audit process, the IRS website offers comprehensive information.

If you’re confident that your tax return was filed accurately, there’s no need to panic. Your refund is likely en route, so exercise patience. Keep in mind that the IRS staff, like everyone else, has been affected by the pandemic, causing some delays in processing. It’s understandable if things are moving a bit slower than usual.

Waiting for a significant refund without knowing its exact arrival date can indeed be frustrating. To ease your mind, utilize the IRS online tool to check your refund status. It might provide insights if there’s an issue with your return, perhaps a minor error like a typo in your address or banking details. Fortunately, such issues are typically straightforward to rectify.