Tax refunds can be delayed for a whole range of reasons in even the most straightforward of tax seasons, but this year, there’s the small issue of a global pandemic to contend with as well. There’s already a backlog of returns that the IRS is working its way through which could be why your refund has been held up, and if you filed a paper return, you’re particularly likely to face a delay. Yet even those who used the best tax software and filed online may be waiting longer than expected this year, so just why are tax refunds delayed?
Will tax refunds be delayed in 2021?
There’s a fairly large chance that your tax refund could be delayed this year, with the IRS admitting that it’s taking longer than usual to process returns, particularly those that have been mailed. This is mainly due to the impact of COVID-19, with it taking the IRS longer to process mailed documents as a result.
Indeed, there was already a backlog of last year’s paper returns from when offices were closed, so if you’re mailing in your return this year, you can expect to get your tax refund late – and there isn’t even an estimate of how long it could take for it to be processed. This is why Americans have been encouraged to file their taxes online this year, but even here, you may be waiting longer than expected in some cases.
How long does IRS processing usually take?
Under normal circumstances, a tax refund will typically be issued within 21 days of the IRS accepting your return, which is within three days if you file electronically, or up to three additional weeks if you mail it (as the IRS has to manually enter your details into the system, hence the extra time). If you’ve requested a check instead of a direct deposit, your refund could take an additional week to appear.
This year is different, of course, but even without the pandemic impacting timescales, there are other factors that could lengthen IRS processing times. These include if you’re claiming certain credits and the IRS needs additional information, in which case you’ll receive a letter asking for those details (though again, if you’re mailing back additional correspondence, be prepared for further delays).
You may also be waiting longer than anticipated if you file particularly early or late in tax season, both of which are high traffic periods for the IRS, when processing times can be impacted accordingly. Additional security measures can also lengthen timescales for some people, such as if the IRS suspects someone has submitted a fraudulent return in an attempt to steal your identity, in which case they’ll have to conduct a full investigation before your return can complete.
And, if there are errors on your return, the process is likely to take longer too, particularly as the IRS may need to get in touch with you for further clarification. Perhaps you've been confused by the home office tax deduction rules or simply input a wrong figure that's thrown all of the calculations out of line? If you need to file an amended return too, this will always be done on paper, further adding to your tax refund delay. This is where the best personal finance software and tax programs can really come into their own, helping you avoid mathematical errors and ensuring your return is as clean as possible.
How to check on your refund status
If your tax refund is late there’s not a lot you can do to speed things up, particularly if you mailed it. However, you can check on the status of your tax refund by heading straight to the Where’s My Refund? tool on the IRS website or by downloading the IRS2Go app. Be prepared with your social security number or ITIN, your filing status and exact refund amount, and both options will let you check where your refund is in the processing system, from receipt to completion.
However, the IRS asks that eager taxpayers refrain from calling to see where their refund is; you should only call if it’s been 21 days or more since you e-filed, or if you’re told to contact them on checking the status of your return. If you mailed your return, you shouldn’t call to check until at least six weeks have passed since you mailed it.
Also, don’t send a second return, as this can cause further delays. If, however, you’ve been asked to send an amended return, you can use the Where’s My Amended Return? tool to check on its status – though be prepared for a lengthy wait, and don’t call to request additional information until at least 16 weeks after you mailed it.
It can be frustrating waiting longer than expected for your tax refund to arrive, particularly if you’re relying on the money to boost your finances, perhaps as a down payment to take advantage of the best mortgage deals, pay down debt, or even dip your toe into the potentially lucrative waters of online stock trading. The key message, however, is to be patient – tax refund delays will unfortunately be commonplace this year, and if you’ve yet to file your return, make sure to do it online and, ideally, well before this year’s extended deadline of May 17.