The IRS began accepting tax returns on Jan 21, 2020. However, there have been some delays in sending some tax refunds to taxpayers, even to those who filed their tax returns early.
That said, the IRS still stands by its message that most tax refunds are issued within 21 days. This tax refund table can give you a rough idea of when you may be able to expect your tax refund.
Tax Refund Delays
Taxpayers who submitted their tax returns early this year may have to wait a little longer than anticipated to receive their tax refund. The IRS recently announced there may be delays in tax refunds this year for several reasons, including decreased budgets and staffing and new anti-fraud measures for the IRS computer systems. As of right now, the delays may cost taxpayers around a week or longer than the estimated tax refund dates.
Additionally, taxpayers can expect longer wait times for help on the IRS phone lines, increased wait times for tax refunds, and other issues, including the potential for increased identity theft.
The new safeguards put in place by the IRS are designed to better screen tax returns filed electronically and help the IRS combat identity theft fraud and other fraudulent tax refund scams. These thefts cost the government hundreds of millions of dollars each year and can tie up tax refunds for months while the IRS investigates the fraud (yet another reason why Identity Theft Protection is a good idea).
On a good note: the IRS also stated there would be fewer audits this year, due to decreased budgets.
Who is Affected by the Tax Refund Delays?
There are several factors that can cause a delay in your tax return:
Claiming Earned Income Tax Credit or Additional Child Tax Credit
A 2015 tax law called the Protecting Americans from Tax Hikes (PATH) Act created built-in certain rules to help protect against tax fraud and identity theft. Part of this law includes a section that requires the IRS to withhold tax refunds for taxpayers who file a tax return claiming either the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC).
By law, the IRS must withhold these returns until at least Feb. 15th of the tax filing year. However, that date represents the earliest possible date, not the expected date. Many returns that include the EITC or ACTC take slightly longer to process than returns without those.
Keep in mind it can take another week or so to receive the funds after released by the IRS. Returns claiming the EITC or ACTC filed after this date should not have a delay.
Tax Fraud Prevention
Additional delays may apply to certain taxpayers who have previously been victims of identity theft or tax fraud. These delays can also apply to taxpayers if their return has been flagged for potential fraud or for further review.
Additional Causes for Tax Refund Delays
Additional delays may apply to filers with incomplete tax returns, tax returns with errors, or returns that require additional reviews.
The IRS still plans to issue 9 out of 10 returns within 21 days, but some returns could take longer. Tax returns filed by paper are expected to take longer than usual, up to 7 weeks (up from the normal 4-6 weeks).
What About State Tax Refund Delays?
Many states are also reporting delays in tax refunds this year. Much of this trickles down from delays at the IRS that were caused by the government shutdown.
Many states use the federal tax code for guidance, and some federal laws trickle down into state laws. But the states need to official rulings from the IRA before they can add it to their state tax code. And of course, it can take time for the states to implement major changes to their tax code.
Most tax software companies will still allow you to complete the state tax forms. However, they will let you know if there are any delays that will impact you being able to file your taxes with your state of residence. If there are delays, you will simply need to wait. If you can file your state tax return, you may still need to wait for your state to process your return and send your refund.
What to Do if Your Tax Refund is Delayed
The first thing to verify your tax return was accepted electronically, and verify the date your tax return was accepted by the IRS. If you filed your tax return manually, then you may or may not be affected since it takes a while for the IRS to enter the returns into the computer (this is done by hand and can take some time depending on the backlog of returns the IRS is working through).
The next thing to do is visit the IRS page, Where’s My Refund page, to verify your tax return will be late. You may also be able to check on your refund date via your tax return software, or your accountant may be able to offer assistance in verifying dates. You can also check the IRS refund schedule to give you an approximate return time.
If your tax return is being delayed for another reason, then it may be a good idea to contact the IRS. It is possible there was an error in your tax return or there may be another problem holding up your refund.
Avoid Promises That Sound Too Good to Be True
If any of the above delays apply to you, then there isn’t much you can do except wait. No tax preparer or accountant will be able to push your tax refund through more quickly. Anyone who promises they can is most likely pushing a Tax Refund Anticipation Loan, which is an advance on your tax return.
In most cases, you receive your tax refund upfront and sign over the return to the company – usually in exchange for a hefty fee. In almost every case you will be much better off waiting for your return instead of taking an advance and paying the excessive fees.