Jonathan Amy, a 74-year-old semi-retired neurologist in McLean, Virginia, is still awaiting a nearly $10,000 refund on his 2020 taxes. His accountant emailed his renewal statement in September 2021 and received an acceptance letter from the Internal Revenue Service.
Finally, last month, Mr Amy contacted the Taxpayer Advocate Service, an independent regulator within the IRS, and a representative told him his return was under review and that he should continue to wait. Though frustrated by how long it’s been, he said “the fact that I’ve heard it’s being reviewed now feels like progress.”
The IRS says it delivers nine out of 10 tax returns within 21 days, a timeframe that hasn’t changed for electronically filed tax returns in two decades. Tax experts report that this tax season, most customers will receive refunds for electronically filed tax returns within five to 14 days. For taxpayers filing on paper, refunds can take four weeks or more, the IRS says.
For the millions of taxpayers waiting for refunds, it can be confusing that it still takes the IRS weeks, months, or longer to figure out the numbers and wire the money — when most of the process is automated.
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A refund that hits your bank account an hour after your electronic file may sound tempting. But it would mean the IRS isn’t adequately looking for people who either cheat or innocently overstate the amount they should be receiving for a refund, said Mark Iwry, a former senior adviser to the Treasury Secretary.
“In order to maintain respect for the voluntary tax system, there must be a sufficient level of confidence among the taxpaying public that the tax authority is properly auditing everyone’s tax returns,” Mr. Iwry said.
According to the IRS, processing time has improved this year. As of March 10, the number of returns submitted is virtually unchanged at 63 million. Nevertheless, 2% more returns were processed than at this point in the previous year. And 8.5% more refunds were issued.
Still, over the past two years, millions of taxpayers have experienced delays in getting reimbursements of 10 months or more, said Erin Collins, who serves as the national taxpayer advocate for the Taxpayer Advocate Service. The IRS faced massive paper backlogs, and temporary pandemic-related items on tax returns tripped computers and required human intervention.
Here’s a look at what happens when you file your taxes with the IRS, why some refunds take longer than others, and what to do if you have a long wait.
First, the IRS must accept your return
After you sign the authorization and click submit, the IRS will perform a quick check to determine if the return will be accepted for processing. This takes anywhere from a few minutes to 48 hours during peak tax season.
During this time, algorithms confirm that there are no red flags regarding the basic legitimacy of the return, such as matching social security numbers and names. Acceptance does not mean your refund has been approved, just that the first hurdle has been cleared.
“Now you are in limbo. You hang out there while the IRS reviews your tax return,” says Mark Jaeger, vice president of tax operations at TaxAct.
checking the return
Once the IRS accepts a return, its computers check it for miscalculations, typographical errors, and suspected identity theft or fraud. The IRS is deliberately keeping the details of those controls to itself, Mr. Iwry said.
When errors are discovered, many can be quickly corrected by the IRS without contacting the taxpayer. In such cases, the returns and refunds are adjusted automatically, all without human intervention. The IRS will send taxpayers a notice of the adjustment, and those who disagree have 60 days to respond. IRS computers spat out 17 million miscalculations last tax season, many related to pandemic tax items.
The IRS then checks the report for accuracy, for example by comparing the numbers you have entered with the data from banks and employers. “If there’s a discrepancy, it goes wrong and that can delay the refund,” Mr Iwry said.
In cases where the IRS needs to reach out to taxpayers by letter to request additional information, such as B. a schedule for individual deductions, the resolution can take more than 120 days. A quick response can expedite your refund.
The computers check whether the taxpayer owes the federal government or anyone else money for federal taxes, student loan debt, or child support. These will be enforced through the refund process.
How payments are processed
To shave several days off processing time, select the direct deposit option on Form 1040 and verify your routing number and account numbers. If you are married together, your refund can be paid directly into US bank accounts in your own name, your spouse’s name, or both if it is a joint account.
If you are filing on paper, there is a keypunching step where an IRS agent manually enters your return information. Another step that comes at the end of the process adds to the processing time: the IRS must send an electronic authorization to the Treasury Department’s Internal Revenue Service to print and mail a paper check.
Where’s my refund?
You can check the status of your refund online at IRS.gov/refunds or using the IRS2Go app, 24 hours after filing your tax return electronically or four weeks after it is mailed. You’ll need to know your social security number or tax ID number, your filing status, and the exact amount of your expected refund. Information is updated daily.
If your refund is late, console yourself with the silver lining: The IRS pays interest on late refunds in most cases, usually after 45 days, using a complex formula, including the current 7% interest rate. Look for a Form 1099-INT as the interest payments are taxable.
This explanatory article may be updated periodically.
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