So by now we all know that the IRS takes at least 21 days to issue a federal income tax refund. Some may get lucky and get their IRS refunds in 10 days or something like that. But for the rest of us 21 days is the general rule of thumb. Even given the 21 day standard, there really are no guarantees, and refund delays do happen. The IRS can take its own sweet time issuing a tax refund, and there’s no law that says they can’t.
A Quick Note if You’re Stressed Out About a Federal Tax Refund Delay
If you are so concerned about your refund that a delay is causing you hardship, you should adjust your withholding so less is taken out of your paychecks. To do this, simply fill out a new W4 form and submit it to your employer. Here’s a link to the IRS website where you can download a W4 and print it out. Or, you can ask your employer for a new one.
Why do Federal Tax Refund Delays Happen?
Because of fraud. There’s more tax fraud so the IRS has stepped up the tax fraud combat program. They’re doing more than ever now to catch identity thieves who steal not only your identity but also your tax refund.
Thieves will typically steal your name and social security number, then use that stolen personal information to file a fake tax return on your behalf. The tax refund goes directly to the thief, of course. They almost always file electronically. The checks sent out by the IRS to phony taxpayers cost our government billions of dollars a year, so you can see why the IRS is intent on combating tax fraud.
The combat measures include assembling a profile of the typical fraudulent tax return and running each return through a filter that checks for similarities with the profile. If your return sends up a red flag as it goes through the filter then your refund will get delayed while the auditors at the IRS check it out.
If your tax return isn’t fraudulent then you have nothing to worry about, you’ll just have to wait a little longer for your refund.
The IRS uses a method of corroboration, partly, to find fraud. Corroboration comes from employers who file W2 forms with the IRS. But sometimes that W2 doesn’t get to the IRS until way too late. In many cases the tax refund has already been sent out!
So, if a return sends up a red flag, the IRS may old onto that return until corroboration evidence comes in. Hence your delay. Let’s look at some red flag issues that may explain your federal tax refund delay.
Ten Possible Reasons for Your Federal Tax Refund Delay
- claiming head of household when you aren’t one. many single people will claim this tax filing status because it results in less tax paid or higher refund, whichever is applicable.
- claiming education credits when you aren’t eligible because you didn’t enroll in any classes or if your educational institution isn’t eligible to use with the education tax credit.
- claiming the child care credit and you didn’t pay for day care or didn’t have children
- claiming EIC by claiming dependents you don’t have. EIC is the Earned Income Credit, designed for low income workers. It gives a credit to low income workers to encourage them to work by not having all their income taxed away from them, making them just not want to work at all. The more kids you have, the bigger the EIC. So claiming fake kids is a common tax fraud method. And a top reason why you may have a federal tax refund delay on your hands.
- you filed so early that some tax forms weren’t ready yet. In this case the IRS just sits on your return until all software is ready to handle all tax forms.
- you put the wrong bank account info for your refund direct deposit. Your tax refund bounces back to the IRS and they have to contact you, etc.
- you didn’t file electronically. paper tax returns mailed to the IRS have to be processed by hand. This adds at least a month to the arrival of your tax refund.
- you had to change something after your submitted your taxes. amendments can’t be filed electronically so basically you’ll be on the same time schedule as the paper filers.
- You claimed the education credit for 2012. The late decisions by congress on the fiscal cliff delayed a lot of programming the IRS had to do to get tax software ready for tax season. IRS form 8863 wasn’t ready for processing by the IRS until March so if you filed before they were ready to process that form then your tax refund got delayed.
- You filed at the last minute. If you filed late or right around the tax due date, then you aren’t alone! So many people file at the deadline or right around it that the IRS has trouble processing that huge glut in a timely manner. Just wait it out and you’ll eventually get your IRS tax refund.