Tax deadline day has passed; if you haven’t completed your 2021 tax return yet, learn why you should do so immediately. Congratulations if you completed your taxes on time! Where has your tax refund gone?
According to the IRS, filing your tax return electronically with direct deposit should result in a tax refund within about 21 days. If you’ve waited longer than three weeks and have not received your refund, there may be an issue or your tax situation may simply require additional processing.
The IRS noted in a March 23 bulletin that some tax refunds may take longer than the expected 21 days and cautioned taxpayers “not to rely on receiving a refund by a specific date, particularly when making significant purchases or paying bills.”
The following are nine of the most frequently cited reasons for IRS payment delays this year. For additional information, see how to locate the best free tax software, learn how to track your refund to your bank account or mailbox, and create an online IRS account.
Your tax return contains inaccuracies or is incomplete.
It’s critical to double-check any information you include on your tax return to ensure it’s accurate. For instance, avoid conflating state and federal taxes withheld. Simply take a second look at your taxes before submitting them to the IRS to correct any potential errors and to ensure you’ve completed all required fields.
Additionally, if you received child tax credit payments last year, verify that the amount shown on Letter 6419 corresponds to the amount received. If an incorrect amount is entered, the IRS will need to review your tax return again, which will result in a “extensive delay,” according to the agency.
Take note that if an issue arises after you submit your return, the IRS will attempt to resolve it without contacting you first. This means that you may be unaware of a problem for days or even weeks.
You owe money to the IRS.
If you owe the IRS back taxes, the agency may deduct a portion or all of your tax refund to satisfy the debt. If your refund is greater than what you owe, the remaining balance will be sent to you via direct deposit or check in the mail, but it may be delayed. The IRS should mail a CP49 notice to taxpayers whose refunds are used to satisfy existing payment obligations.
Even if you owe no money to the IRS, the agency may retain your tax refund if you owe money to other state or federal agencies. The Treasury Offset Program enables the IRS to deduct all or a portion of your tax refund to pay child support, state taxes, or unemployment compensation repayments. These debts may cause your remaining tax refund to be delayed or eliminated entirely.
Your banking details are incorrect.
Have your banking arrangements changed since you last filed your taxes? If this is the case, pay close attention to the direct deposit information on your return this year. If you forget to update it with your new direct deposit information, the IRS will return your refund. This will almost certainly result in the mailing of a paper check to your address, which could take several weeks longer to arrive.
You submitted your tax return on paper.
The IRS is encouraging taxpayers to file electronically and establish direct deposit in order to receive their refunds more quickly this year. Due to mail delays, the IRS may take some time to receive your return and even longer to issue a paper check.
The IRS notes that filing your return online rather than by mail is more critical than ever this year to avoid refund delays. Rather than filing a paper tax return, use one of these free online tax filing services to avoid having to wait for your refund.
You did not enter your stimulus payments correctly.
By 2021, the majority of Americans would have received a third stimulus check in response to the COVID-19 pandemic. While that money is not taxable, if you are claiming the recovery rebate credit, it must be reconciled on your tax return.
IRS Commissioner Charles P. Retting recently testified before the House Ways and Means Committee that the IRS will receive “far more than 10 million returns” in 2020 from taxpayers who failed to reconcile their stimulus payments with the amounts entered for their recovery rebate credits. These returns necessitate manual review, resulting in lengthy delays.
If you intend to claim the recovery rebate credit on your tax return, you can learn how to avoid this error by referring to IRS Letter 6475 or logging into your online IRS account.
You completed and submitted Form 8379, Injured Spouse Allocation.
While this form may sound painful, it has nothing to do with physical injuries or disabilities.
When a married couple filing jointly owes a federal debt, the IRS has the authority to seize their tax refund to satisfy the debt. If only one partner owes money, the other partner may be considered “injured” and may be entitled to at least a portion of the anticipated tax refund. Incorporate IRS Form 8379.
While this is not as common as some of the other causes, the delay in receiving a tax refund is significant. According to the instructions for Form 8379, taxpayers should anticipate a processing time of up to 14 weeks, or up to 11 weeks if filing electronically.
The Internal Revenue Service suspects identity theft.
If the IRS suspects that a tax return may be the victim of identity theft, the agency will withhold your refund until your identity is verified. When this occurs, you will almost certainly receive a 5071C letter with instructions on how to prove your identity. If your tax return is legitimate, there is no reason to panic; an IRS letter does not constitute proof of identity theft, only a suspicion.
Individuals can verify their identity on the IRS website, which currently requires the creation of an ID.me account, or by calling the IRS letter’s dedicated phone number. If none of those methods work, you must schedule an in-person appointment with an IRS agent at a local IRS office.
One way to avoid delays caused by identity theft is to create a “Identity Protection PIN,” or IP-PIN. This six-digit identification number is unique to you and the IRS and prevents others from filing a return in your name. The IP PIN is only valid for one year; if you want the same level of identity protection next tax season, you’ll need to create a new one. To create an IP PIN online, you’ll need an ID.me account, though you can also obtain one via IRS Form 15227 (PDF) and a telephone interview or in-person appointment.
You amended your tax return.
It can happen to anyone — you may have overlooked a form or a significant deduction, or you may have chosen the incorrect filing status by accident. If the change is significant enough, you should file an amended return. The IRS permits anyone who electronically files their tax return to also electronically file an amended return, but only for the current year.
If you choose to file an amended return, you must exercise patience. The IRS warns that it may take up to 16 weeks to process amended returns. You may wish to wait until you receive your tax refund from your original return before filing an amended return. Often, the IRS can correct minor errors and adjust your tax refund appropriately. The agency provides an online tool to assist you in determining whether you should amend your return.
Your return requires additional scrutiny.
As mentioned previously, if you receive a message from the IRS indicating that your tax return requires additional review, you can anticipate your refund to arrive later than the standard three weeks. If you receive a CP07 Notice, for example, it means the IRS has received your tax return and is withholding your refund pending a more thorough review. This notice may be sent to you if you claim treaty benefits or deductions on Schedule A (PDF) of your taxes.
If no issues are discovered, your refund should arrive within six to twelve weeks, assuming no taxes are owed. If the IRS discovers a problem with your return during that time period, it will send you a notice with instructions on what to do. This means you will receive your refund months later than expected.
For additional information, here are the most critical tax filing dates and deadlines. Additionally, here are ten tax changes that may affect the size of your refund, as well as thirteen tax deductions and credits that may increase your refund.