Tax season is drawing to a close but if you haven’t gotten your refund yet, you may be wondering what the hold up is. Previously, we wrote about 7 reasons why you haven’t received your tax refund yet — here are five more possible reasons behind your tax refund delay.
Taxpayers who are expecting a refund are getting more than $3,000 back on average this year, which can certainly come in handy if you’re planning on using it to pay off debt or add to your retirement savings.
Waiting for the money to hit your account can be nerve-wracking, especially if it’s been several weeks since you filed your return.
1. You left something out
Sending in an incomplete return can significantly delay the receipt of your tax refund. For instance, if you use paper forms to file your taxes, failing to sign them or omitting any of your personal information, such as your full name or Social Security number, are guaranteed to put the brakes on your refund. If you have to forward additional information or paperwork to the IRS, it could add weeks or even months onto the processing time.
E-filing can eliminate some of the room for error but it’s not foolproof, especially if you have a more complicated return. Forgetting to include income information from a 1099, for example, can be problematic since the IRS will already have a copy on file. If the information you’ve provided doesn’t match up with what the IRS has because you overlooked it, they may decide to take a closer look at your return, which would result in a delay of your refund.
2. You defaulted on a debt
If you default on an unpaid credit card bill, your creditor can take you to court to collect but when you’re in debt to a government agency, they have a much more direct measure for recouping what’s owed. If you’ve gotten behind on your student loans, have a past due tax bill or you’re in arrears for a state-issued child support order, these are all grounds for having your refund offset.
When your refund is set to be seized, you’ll receive a notice from the Treasury Department detailing your original refund amount, the amount of the offset and contact information for the agency that’s receiving the payment. If you don’t think you owe the debt or you want to dispute the amount that was offset, you’ll have to take it up with the agency that laid claim to your refund.
Tip: In addition to losing your tax refund, you may also be subject to wage garnishment if you default on student loans that are backed by the federal government.
3. You entered the wrong bank account information
Having your refund deposited directly into your bank account cuts down on the time it takes to get the money since paper checks take longer to be issued but you have to be careful about entering the correct numbers. Making even a simple mistake can spell disaster for the status of your refund.
How much longer it’ll take to get the money depends on the nature of the error. For example, if you leave off a digit of your routing number, the deposit wouldn’t pass the IRS’s validation check. In that situation, you’d be issued a paper check instead.
If you enter the correct routing number but your account number is wrong, it can go one of two ways. First, your bank could reject the deposit which means it would go back to the IRS and you’d have to wait until a paper check is sent out.
In the second scenario, the bank could deposit the money into the wrong account. At that point, the IRS assumes no further responsibility and you’d have to take it up with the bank to get your refund back.
4. You amended your return
In some situations, it may be necessary to amend your tax return after it’s been filed. Some reasons why an amendment may be necessary include:
– You’ve received a corrected W-2 or 1099
– You’ve realized that you made an error in claiming a deduction or dependent
– You need to change your filing status
If you have to make changes to your return and you’re expecting a refund, whether or not you’ll be waiting longer depends on if you’re going to get more money back. When you’re due a larger refund, amending your return can add 12 to 16 weeks to the processing time.
5. You claimed the Earned Income Credit
The Earned Income Credit (EIC) is a refundable tax credit that’s designed to benefit low to moderate income workers and their families. Claiming the credit can reduce the amount of tax you owe and increase your refund. While you shouldn’t shy away from claiming the credit if you’re eligible, you should be aware that it may take longer to get your refund if you do.
Due to the high number of taxpayers who fraudulently claim the EIC, the IRS pays special attention to returns that include it. If you’re claiming it for the first time or you’re getting a much bigger credit than you have in previous years, the IRS will want to make sure that all the information you’ve provided is correct before releasing your refund.
Tip: If you’re owed a refund, you have three years from the filing deadline to get your return in. If you don’t claim the money before the window closes, Uncle Sam gets to keep it.
Other reasons for a delay
If you’re certain that you’ve completed your taxes correctly, your tax refund delay could just be due to the fact that the IRS has cut back its workforce in recent years. Budget cuts have resulted in the agency shrinking its staff but there is a bright side. Even though refunds may take a little longer for some taxpayers, the number of audits is expected to go down.