With tax season fast approaching, many will be excited about the prospect of a tax refund.
The IRS says it delivers 90% of tax refunds within three weeks, and tax pros are reporting that tax refunds from e-filed returns are coming in five to 14 days after filing, according to The Wall Street Journal (WSJ).
However, for the 10% of taxpayers who still file on paper, their refunds can take four weeks or more, according to the IRS.
Why so long?
“To maintain respect for the voluntary tax system, there has to be a sufficient level of confidence among the taxpaying public that the tax authority is appropriately checking everyone’s returns,” Mark Iwry, who served as a senior adviser to the Secretary of the Treasury, said, according to the WSJ.
While the IRS says processing times have sped up this year, with 2% more returns having been processed at this point than at the same time last year, over the past two years, tens of millions of refunds saw delays of 10 months or more, according to the WSJ.
This is partly due to pandemic-related items on tax returns and a need for more clarity from the IRS on some stimulus payments.
As previously reported by The Dallas Express, just last month, the IRS said to wait to file returns as it determined whether state refund and rebate payments would count as taxable income.
Immediately after filing your taxes, the IRS checks to see whether to accept the tax return for processing, a process that can take as little as a few minutes to up to two days in the heat of tax season, according to the WSJ.
During this time, the IRS looks to confirm basic details, such as the Social Security number and name.
When a tax return is accepted, the IRS then checks for accuracy and suspected identity theft or fraud. Errors at this stage can sometimes be fixed automatically, and then the IRS will send a notice regarding the adjustment, giving taxpayers 60 days to respond. IRS computers also check to see if a taxpayer owes money to the federal government or student loan debt or child support, which get enforced through tax refunds, according to the WSJ.
Because the pandemic and shutdowns complicated tax returns, the IRS sent out 17 million math-error notices in 2022, according to the WSJ.
If the IRS sends a taxpayer a notice, it can hold up the return significantly, sometimes for as long as four months, the WSJ reported.
To speed up the processing time of a tax return, the WSJ suggests choosing the direct deposit option on Form 1040 and ensuring all banking information is up to date.
To check the status of your tax refund, you can go to IRS.gov/refunds or use the IRS2Go app.
If your tax refund is delayed by 45 days, there is some good news: the IRS pays interest on late refunds. With interest rates at 7%, you will be compensated for your patience.