In an ordinary year, most people receive their tax refunds within 21 days of filing electronically. But this is no ordinary year. The IRS already had a backlog of paper tax returns to process from last year after COVID-19 sent workers home, and the start of this year’s tax-filing season was delayed from late January until Feb. 12 to give the IRS extra time to prepare for tax law changes from the Dec. 27 relief package. Even after the IRS started accepting 2020 returns, Congress changed some key tax laws again on March 11 — including a $10,200 tax exclusion for unemployment benefits after many people filed their tax returns — causing additional delays. Meanwhile, the IRS was also tasked with distributing the stimulus payments from the relief bills.
“Aside from the usual tax season crunch, which they alleviated a bit by extending the deadline to May 17, they had three different stimulus checks to either distribute via debit cards or deposit to the taxpayers’ bank accounts,” says Susan Carlisle, a CPA in Los Angeles.
If you’re still waiting for your tax refund, here’s what to know.
How Long Does It Take to Receive Your Refund?
If you file electronically with direct deposit into your bank account, you’ll usually get your refund within 21 days if there aren’t any issues with your return. If you e-file but request a paper check, it usually takes about a month to receive your refund. That time frame can expand significantly — to two months or more — if you file a paper return and request a paper check.
The process can take longer if there are mistakes on your return, if the income you reported doesn’t match up with the W-2s or 1099s the IRS received for you, or if your return was affected by recent tax law changes.
How to Check the Status of Your Refund
You can use the IRS’ Where’s My Refund? tool to check the status of your refund within 24 hours of e-filing. If you filed a paper return, you may not be able to check on the status until four weeks after filing or later. Input your Social Security number, your filing status and the exact dollar amount of the refund from your tax return. The tool will let you know if your return has been received, if the refund has been approved, or the refund has been sent. The IRS updates the information daily.
However, some refunds have been delayed for so long this year that the tool isn’t always helpful. It lets taxpayers know that the return is being processed, but doesn’t provide an explanation or additional information — a problem the IRS’ national taxpayer advocate service wrote about in late April.
Below are some of the reasons why your payment may be delayed and what you can do about it.
Why Is Your Refund Delayed?
Your refund may be delayed for several reasons in a typical year, plus some special reasons for 2020 returns. In some cases, you’ll just get the money later than expected. In others, the IRS may send you a letter asking for additional information before it can finish processing your return and send your refund. Remember: The IRS will never call you if it has issues with your return — that’s usually a scam — but will send you a letter instead.
If you do receive a letter from the IRS about your return, take action right away. “Once you’ve confirmed that it’s legit, you should definitely respond in the manner requested in the letter,” says Kathy Pickering, H&R Block chief tax officer. “If you don’t respond, the IRS is most likely not going to release your refund or complete the processing of your tax return as expected.”
Here are some reasons why your refund may be delayed:
Errors on Your Return
Your refund may be delayed if you made math errors or if you forgot to sign your return or include your Social Security number. It may also be delayed if your dependents‘ information doesn’t match IRS records, or if you left out a corresponding schedule or form to support a deduction or credit, says Pickering.
For small math errors, the IRS may correct the error and send you a notice of the change. For larger issues, you may need to respond to an IRS request for more information.
Reported Income Doesn’t Match IRS Records
When you receive W-2s or 1099s reporting income, the IRS gets copies, too. If the numbers you report and the information the IRS receives don’t match up, your refund may be delayed while the IRS figures out how to reconcile the discrepancy. “If data on your tax return doesn’t match data in the IRS systems, it goes to the error resolution path,” says Mark Steber, chief tax information officer for Jackson Hewitt Tax Service. Make sure you don’t leave out any income when you file your return, especially if you have several side gigs.
Direct Deposit Accounts Don’t Match Up
Your refund may be delayed if you chose direct deposit but the ownership of the bank account doesn’t match up with the filing status on the return — such as if you have the refund deposited into an account for one spouse when the return was filed jointly, says Barbara Weltman, author of J.K. Lasser’s 1001 Deductions & Tax Breaks 2021. In that case, the refund may be delayed and the IRS may send a paper check.
The IRS Suspects Identity Theft or Fraud
“IRS identity theft filters sometimes delay returns and tax refunds until taxpayers verify their identities,” says Pickering. “You’ll likely need to provide the IRS Taxpayer Protection Program unit with information from last year’s return, your current year return and your current year Forms W-2 and 1099.”
The Recovery Rebate Credit Doesn’t Match
This is a special situation for 2020. If you didn’t receive the full stimulus payment you were eligible for in 2020 — if, for example, you had a child in 2020 or your income was lower in 2020 than it was when the stimulus payment was originally calculated based on your 2018 or 2019 income — you could claim additional money, called the recovery rebate credit, when you filed your 2020 tax return.
The IRS has indicated that refunds may take more than the normal 21 days if you claimed a recovery rebate credit and the amount you claimed does not match what the IRS calculates you are eligible for, says Pickering. In that case, the IRS will manually review your return, and it may take an additional 10 to 14 business days to receive your refund, she says.
Double Dipping on Dependents
Since it’s easy to use tax-filing software, some young adults filed their own tax returns and didn’t coordinate with their parents’ return, says Carlisle. “Many kids realized they could do their own taxes online themselves, so they took their own exemption,” she says. If their parents took them as dependents, too, you can’t do both. “So refunds are stopped until it’s figured out and someone has to file an amended return,” she says.
You Need to File an Old Return
“When the IRS pursues back tax returns, the IRS can freeze any refunds you may be due until you file the old return,” says Pickering. “The only way to fix this issue and get your refund is to file the past-due return. If you owe taxes on the old return, the IRS will take that amount out of your current year refund.”
You Mailed Your Return
It always takes longer for the IRS to process paper returns, and the time frame was extended when many IRS employees were working remotely over the past year. “Typically, a refund for a paper return would be a few weeks. Now it may be months,” says Weltman. “If you e-file but want a paper check, typically it would be received within a few weeks. Again, it may be months.”
And it can take even longer if there are errors or inconsistencies on the return. “When taxpayers e-file their return, the e-file process catches many return errors and rejects the returns at the time of filing,” says Pickering. “If you mail your return instead of e-filing it, the IRS is more likely to identify an error after the fact.”
[READ: What Is a Tax Shelter?]
You Received Unemployment Benefits
Many taxpayers had already filed their returns when the March 11, 2021, relief bill excluded up to $10,200 in unemployment benefits from taxes for 2020. Rather than asking these early filers to amend their return, the IRS announced that they would recalculate the refunds for people affected by the change. “These taxpayers will likely receive a separate refund from any refund due on an already filed return,” says Pickering. “These will start going out in May and continue into the summer. The IRS will start with single taxpayers who had simple filing situations and exempt unemployment income first, then look to married filing jointly filers and taxpayers with more complex filing situations.”
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When You Should (and Shouldn’t) Worry if Your Tax Refund Is Delayed originally appeared on usnews.com
Update 05/14/21: This story was published at an earlier date and has been updated with new information.