IRS tax returns and refunds are considered to be a daunting task for taxpayers because of several different reasons. Factually, there is some relative ambiguity on the part of the taxpayers, essentially because of the outcome of the tax filing as well as the refund status. Therefore, it is advisable for taxpayers to complete their tax returns with required due diligence so that the risk associated with IRS Audits is minimized to the utmost extent.
IRS Refunds are claims that are made by the taxpayers as a representation of taxes that have been overpaid, or claims that have not yet been claimed. Filing for refunds is often a tedious task because it involves a few complications that need to be sought out in order to ensure that the return generation process is streamlined.
5 Reasons why IRS Refunds are delayed
Delays in refund receipts are quite common. While on one hand, this might be because of delays on the part of the IRS, yet there are some common errors, on the part of tax filing, that result in refund delays. The most common reasons as to why refunds are delayed are given below:
Incomplete tax information
This tends to be the primitive reason behind delays in tax refunds. It is of primitive importance to ensure that all information presented in the tax filing records is accurate, and is a proper representation of the actual financial position of the individual. It is important to make sure that all sources of income are duly presented in the financial statement, so that there are no red flags on the part of the IRS.
The main idea here is to ensure that red flags are minimized to a proper extent. In this aspect, disclosure of information is highly important. In case where IRS figures out that there is incomplete information in the tax records, it might eventually result in refund being delayed.
Claiming Certain Tax Credits
Tax Credit claimed by an individual play a very significant role in reducing tax liabilities on a dollar-to-dollar basis. Certain tax credits, like EITC (Earned Income Tax Credit) and CTC (Child Tax Credit) often result in scrutiny on the part of the IRS. In case certain tax credits are claimed, it eventually results in refund being delayed quite significantly.
Inaccurate tax information
Just like incomplete tax information, inaccurate tax information also tends to be a very major reason behind delays in the refund process. If the IRS finds any inconsistencies in the returns filed, it eventually leads to unprecedented delays in the tax refunds.
Any inaccurate information presented in the tax records raises red flags on the part of the IRS. This further opens room for more scrutiny on the part of the IRS. Therefore, it is understandable to think that it would eventually lead to a delay, and it will only be processed once the IRS has managed to tick all check boxes in this regard.
Inaccurate information might also include incomplete, or incorrect account details presented in the tax returns. For instance, if someone has mentioned an incomplete account number, or incomplete account details, IRS tax refunds would naturally be delayed.
Amendments in the tax return
Amendments in the tax return is also a reason for delays in the refunds process. A lot of individuals tend to change some parts of the tax returns, after the return has been filed. In case of normal filing of returns, the approximate waiting time is 16 weeks, before which the refund will be processed. Hence, it is important to realize the fact that any chances in the current, or previous year’s tax returns does eventually result in delays in the tax filing system, and hence, this causes a delay in refund receipts.
Therefore, it is always advisable to report tax returns when they are due, with proper diligence. Despite the fact that amendments are allowed in most cases, yet it results in delaying of the refund processing, and hence, should be avoided to an utmost extent.
Last minute filing
Last minute filing implies that a lot of returns are deposited and hence, cluttered towards the end. In case where individuals file their returns towards the end, the likelihood of processing delays is of a significant magnitude. Normally, IRS processes all the returns in a perpetual manner, and therefore, filing early does give an individual and edge in terms of ensuring that the refund is processed in a timely manner.
Last minute filing mostly creates confusions and hassles. It also increases the overall chance of error in IRS refunds. Hence, it is always advisable to file returns in a timely manner, so that the overall chances of error are minimized.
How to check the IRS Refund Status
IRS Refund Status can be checked and assessed via the “Where’s my Refund?” tool available on the IRS website. This is also referred to as the “Refund Hotline”.
However, it must be noted that the refund status is not uploaded perpetually on the website. In fact, in case of electronic filing, the system takes around 72 hours to update. Mostly, system is updated twice a week, or once a week. When updated once a week, it is mostly updated on Wednesdays. For normal filing systems, applicants are also advised to wait for a period of three weeks before the portal is updated.
How to expedite the refund generation process?
The refund generation process can be time consuming if it is not approached in the right manner. However, there are some tips and tricks that can be utilized in order to ensure that refund generation process is taken care of in a proper manner. These tips and tricks are as follows:
- Electronic filing: Statistically, electronic filing is known to have quicker processing times as compared to other types of electronic filing. Therefore, in case an individual wants to receive refunds early, it is always preferable to file returns online.
- Opt for Direct Deposits: There are three options that are available to get refunds. Taxpayers can either opt for direct deposits, mailing checks, or purchase of U.S. Treasury Bonds. Direct deposits are the most preferred option, since they are implemented in a quicker time frame. Hence, when opting for either of these options, it is preferable to opt for Direct Deposits.
- Mentioning complete information on the tax records: Nothing triggers IRS red flags more than inaccurate, and incomplete information. Therefore, it is always advisable to make sure that all the information that is mentioned on the tax return is accurate to the T. Proper disclosure of income, expenses and other assets is imperative to a smoother processing time of IRS Refunds.