Why your IRS refund is late this year – Forbes Advisor

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The IRS is overwhelmed. While he struggles to deal with the treatment issues due to the pandemic and the last-minute changes from the last tax credits approved by the Biden administration, there is a painful consequence for many Americans: a potential delay in receiving their tax refund.

Delays in receiving your tax refund can be frustrating, especially if you were relying on the cash to pay your bills or purchase everyday items. Here’s what we know as to why this is happening and what you can do to deal with the delay.

Why your tax refund may be delayed

In 2020, the IRS closed its offices due to the pandemic. This created a backlog of unprocessed paper tax returns for 2019 the IRS is still catching up – and that doesn’t even count the high volume of 2020 tax returns being submitted.

The IRS says several departments are affected by these issues, including a slowdown in the review of newly filed tax returns.even if they are filed electronically. This in turn may delay the issuance of refunds.

In normal years, most electronically filed tax refunds are issued within 21 days. But there can still be delays for reasons such as:

  • You made a mistake on your return
  • You are claiming the labor income tax credit (EITC) or additional child tax credit. To avoid fraudulent claims for these credits, the IRS does not issue refunds for tax returns claiming these credits until mid-February of each year.
  • Your return is affected by fraud or identity theft
  • You filed a paper tax return

The IRS processed more than 91 million individual returns for the 2020 tax year to April 22, 2021, and more than 68 million refunds have already been issued to taxpayers.

But the agency is still holding more than 29 million returns for manual processing, including over 5 million 2019 and 2020 returns filed on paper.

Options for people who expect faster reimbursement

If you were counting on a tax refund by April or May, you may be eagerly awaiting your return and wondering if there are other options for accessing the necessary funds.

Ideally, it’s best to be patient and wait for your refund as long as you can. People need to allow more time for their returns to be processed and plan for delays, says Benjamin Peeler, partner in charge of IRS tax controversy services at Eide Bailly, a certified accounting and business consulting firm based in Fargo, North Dakota.

“There are no real options to push for a refund sooner and there are even fewer options than before the covid delays with the IRS,” he says.

You may be able to get a tax refund advance, but look at your budget to see if taking out a loan is your best option. You should budget extra for the fees and interest you will pay, depending on how long it will take to repay the loan and when you will receive your tax refund.

While many tax preparers such as H&R Block and Jackson Hewitt offer loans or advances on favorable terms – including not charging loan origination fees or interest if they did prepare your tax return. – Most of these programs ran from mid to late February and are no longer available, says Daniel Fan, senior managing director and manager of wealth planning at First Foundation Advisors in Irvine, Calif.

Shop around to find out which tax preparers still offer cash advances, and examine their fees and interest rates to see which one works best for your budget.

Another option is to get a personal loan from a bank or credit union. Once you’re approved for the loan, you typically receive the money in seven days or less, Fan says. Try to avoid personal loans which have setup fees, which are often around 5%. If you borrow $ 1,000 and there is a 5% setup fee, there will be a $ 50 fee, so you will only receive $ 950, he says.

“A person will still need to get approved for a loan, so this option isn’t available if your credit score is low,” Fan says.

Online lenders also offer personal loans. Applying online might speed up the process and you might also receive the money sooner. Whether you are applying online or in person, if your credit score is below 670, expect to pay a higher interest rate on everything you borrow

What to do while you wait for your refund

Unfortunately, you won’t be able to expedite your refund by calling and speaking with an IRS employee. IRS says, “Our phone and walk-in representatives can only look up the status of your refund 21 days after your electronic filing; six weeks after sending your paper return. »You can check the status of your refund from Where is my refund or download the IRS2Go application.

The IRS bottleneck may not be resolved anytime soon. No one has the control or the ability to skip the line “Because there’s no rhyme or reason to their order of processing,” Peeler says. “We had two related taxpayers who filed on the same day for the same refund amount and essentially the same returns. Both were received by the IRS on July 17, 2020 – one has been processed and the refund issued on March 8, 2021 and the other has yet to be processed. “

How to avoid late repayments next year

The key to getting your refund as quickly as possible is to file online if possible. Avoid filing a paper return by mail, as it usually takes longer to process.

If you qualify or feel confident about manually filing your income tax returns, consider doing so online through the IRS Free File or Forms to fill out free of charge. When you deposit online, you will receive prompt confirmation that your return has been accepted or rejected. Email confirmation often occurs within minutes. You can also enter your bank account information to receive a direct deposit of your refund or make a payment online.

When filing your return, avoid guessing at amounts reported by third parties such as banks, stock accounts, health insurance payments or mortgage interest, Peeler says. Instead, get the exact amounts by verifying your account online or from documents sent by these companies. For example, mortgage lenders send statements (Form 1098) showing the exact amount of interest you paid on your loan.

Having mismatched amounts will cause your refund to be delayed even if you underestimated the amount of a deduction.

“These discrepancies can trigger Letters CP2000 or requests for additional information on letter 2626C, ”Peeler says. “If you miss these letters and don’t provide the additional information, your feedback may be put on hold until they get a response.”

Another option is to work with a volunteer with the IRS program called Volunteer tax assistance (VITA) program that can file your taxes for you for free. It has partnerships across the United States offering free tax preparation for people who typically earn $ 57,000 or less, people with disabilities, and limited English-speaking taxpayers.

VITA Volunteers “Only file online because these returns are processed faster, and we strongly encourage taxpayers to provide bank account information for direct deposit,” said Nell Curtis, an accounting instructor at Milwaukee Area Technical College in Wisconsin, who volunteers for VITA. program. “These refunds are much faster than paper checks in the mail.”


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