Tax filing can be a daunting task for a lot of taxpayers. A lot of taxpayers file their taxes before the deadline in order to get the tax refunds processed quickly. However, it is important to remember the fact that the IRS does require some time in order to issue the refund.
A lot of taxpayers, in order to expedite the filing process wish to file the returns before the month of April so that they can get their tax refunds quickly. However, the time taken by the IRS to file the tax return is contingent on the time taken to process the tax return, before it issues the refund. Therefore, the time of filing for tax refunds, and receiving the tax refund is contingent on filing the tax return, and the method of payment requested.
For all years, there are different dates by which taxpayers are supposed to file for their returns. However, this date keeps on changing from one year to another. However, mostly the last day to file the tax returns is somewhere in April.
What Day Does the IRS deposit refunds?
Previously, under the old system, the IRS used to issue refunds once a week. This was normally either on Wednesday or on Saturday. However, as per the new system, IRS now deposits funds every day from Monday through Wednesday, with the exception of public holidays.
However, this also varies from case to case, since different tax returns have different refund durations.
Things to consider when filing tax returns
There are several different aspects that need to be considered when it comes to filing tax returns. As a matter of fact, it can be seen that taxpayers need to be extremely vigilant in order to ensure that the tax filing process is executed in a smooth manner, and there are no red flags on the part of the IRS. The red flags, when it comes to taxpaying and tax returns are as follows:
- Failure to report all taxable income
- Abnormal income fluctuations
- Excessive deductions, and tax credits
- Large charitable deductions
- Rental losses claims
- Non-filing of tax returns
- Failure to report gambling wins or losses
- Failure to report all foreign bank accounts
- Significant currency related transactions
If IRS finds ambiguity in either of the points mentioned above, it might eventually result in an audit, and therefore, a delayed refund service.
Therefore, the advisable course of action is to ensure that taxpayers try to avoid all filing red flags to a maximum, so that the chances of any delays in return processing, and subsequent refund generation are minimized.
What Impacts IRS Refund Duration?
There are several different factors that influence how taxpayers receive their tax refunds. Factually, it can be seen that IRS tax refund duration is majorly influenced by the following factors:
- Timeliness of the tax filing – the earlier the tax returns are filed, the greater the likelihood of quicker turnaround times.
- Credit Claims – In case taxpayers claim tax credits, particularly EITC and CTC, the chances of delays in refund processing are probable.
- Method of filing – Statistically speaking, e-filing tax returns mostly result in quicker refund processing times.
- Debt position – If the taxpayer has debts to the federal government, the tax refund process can be delayed.
How Does the IRS make Tax Refunds?
There are three ways in which tax refunds can be claimed. These ways are as follows:
- Direct Deposit in the account: Funds are deposited directly in the account
- Have a paper check emailed: Using this methodology, paper check is directly mailed to the address provided by the filer.
- U.S Savings Bond: This method is relatively less popular as compared to the other two methods. Taxpayers also have the option to purchase U.S Savings Bond from the IRS tax refund that is received.
How Often are Tax Refunds Processed by the IRS?
Tax funds are processed by the IRS two times a week. On the first day of processing, IRS mostly processes refunds that it makes through direct deposits. On the second day of processing, IRS sends out all refund checks to taxpayers who do not choose direct deposit.
However, this does not imply that the refund is processed immediately after the tax return is filed. When the tax return is filed, it takes a time duration of around six weeks from the date on which the refund was initially filed.
In the case where tax refunds are processed using an e-filing system, the processing time is almost cut in half. This implies that after a return has been filed electronically, the refund is deposited in the bank account for a period of three weeks.
How Can the Refund Status be Monitored?
If taxpayers wish to monitor the status of the refund to know when it is received, it can be accessed through the “Where’s My Refund” tool that is available on the IRS website. It is also referred to as a “Refund Hotline”.
However, it must be noted that the refund status is not updated perpetually. In fact, it is updated on a periodic basis every week. It is mostly updated on Wednesday. In the case of e-filing of returns, the applicant is advised to wait for 72 hours from the date where the IRS confirms receipt of the return before checking for the refund status. Similarly, for normal filing systems, applicants are advised to wait for a period of three weeks, before the portal is updated.
How to Expedite the IRS Refund process?
Regardless of the fact that the IRS does try to process the refunds at the earliest, there still are delays in the tax filing process. This is primarily because of the volume of returns that the IRS has to process in a given year. However, there are some tips and strategies that can be used as an attempt to expedite the IRS Refund process. These methodologies are as follows:
- Electronic filing of the tax returns
- Selecting refund receipt via direct deposit
- Avoiding any guess work
- Keeping a proper record pertaining to IRS stimulus
What Delays the IRS Refund Process?
There is no formal information regarding do’s and don’ts that impact tax payments by the IRS. However, there are some aspects within the tax returns that are known to slow down the refund process.
For example, IRS is known to delay the refund process by a margin of around 2-3 weeks if the taxpayer has EITC (Earned Income Tax Credit), and CTC (Child Tax Credit). The reason why these credits result in delays is primarily because of the fact that these credits are often misused by the taxpayers. Therefore, IRS takes additional time in verifying and checking for these claims.