While everyone appreciates a timely tax refund, there are a few situations that might cause a return to be delayed. We'll examine a few of these reasons to help you understand what could be delaying your tax refund.
If you're one of the few people who still files their tax return on paper, you should know that the IRS takes longer to process those returns because they still have to input those returns into their computer system. And while the vast majority of returns are eligible for e-filing, there are certain tax credits and situations that require paper filing.
If you are eligible to e-file, we recommend going that route. Taxfyle can prepare your returns for you and either e-file your return or provide you with a PDF that you can print, sign and send in. No matter which way you prefer (or have to) file, we've got you covered!
The IRS cross-references the information that you submit with the information that they receive from other sources and what they have on file for you from previous years. This information includes your full (legal) name, social security number, address, date of birth, and all the information related to other individuals on your returns (spouse, children, dependents, etc.).
If some of the information provided on your return is inconsistent, the IRS may dig a little deeper before issuing you your refund. After all, cross-referencing your information among various sources is one of the IRS's primary methods for fighting tax refund fraud.
Incomplete returns are one of the primary culprits in causing late returns. Often times, you may forget to include a required form or schedule and this will cause the IRS to send you a notice stating that your return is incomplete.
Sometimes it could be as simple as a supporting schedule, or other times, it might be a little more complicated like a lender having forgotten to send in your student interest statement to the IRS (or maybe they sent it in with an SSN that doesn't match yours). In some cases, it could be that someone sent in a 1099-MISC to the IRS, but you didn't receive your copy for some reason, so you didn't include that income on your return.
The fastest way to correct these issues is to file an amended tax return as soon as you're made aware of the issue. Taxfyle can help you file an amended return if for some reason the IRS determined that your return was incomplete.
Filing too Early
The IRS usually starts to accept returns in late January (date varies from year to year). Filing your return before that date might cause the IRS reject your return.
Sometimes, waiting too long to file may be worse than filing too early. As you've probably heard, identity theft around tax returns is a growing issue for the IRS. Often-times, identity thieves will file your return for you and direct your tax refund (often inflated) to their bank account.
The IRS has measures in place to help prevent fraudulent submissions, but in the event that those measures fail, the IRS will prevent anyone from filing a return under that identity again in the same year. So if an identity thief files your return before you do, the IRS will deny your legitimate refund until it can investigate your case. Once the IRS resolves your case, they will then issue you your refund; but this can take anywhere from a few weeks to a year or more.
Yet another reason to avoid the old pen and paper when it comes to filing is that any errors made (whether it be simple 'rithmetic or forgetting to add in a line from another schedule) will cause the IRS to require you to correct your return. In some cases, they can propose a solution for you, while other times, they'll simply require that you file an amendment.
Taxes are never fun, and having your refund delayed can be downright frustrating. However, knowledge is power, and knowing the most common reasons can help you avoid the pitfalls. Often times, having a professional file for you or at least using tax software and filing early can help you to avoid having your refund delayed.