Why Millions Of Tax Refunds Are Still Delayed
Millions of taxpayers have been checking IRS.gov almost daily and growing frustrated with a lack of information about their tax refund.
They don’t understand why refunds that used to arrive in two weeks are now three months late, with no updates on when they might go out.
Mike Seidenman is among them. He filed electronically back in February and expected a quick refund of a couple of thousand dollars.
“I keep checking, and all the IRS says is that it is pending,” he said. “Normally, it’s immediate. Last year we filed and got our refund a week or 10 days later.”
Hospital worker Carol Abel is in the same situation.
“When I was checking the IRS website, it did finally say, ‘We have your return, but they are still working on it,'” she said. “I have been getting that ever since.”
Cynthia Jenkins says her son has been hit with a double whammy.
“He’s still waiting on last year’s tax refund and his stimulus checks,” she said. “He never got either one.”
IRS explains reason for record delays
The IRS now admits it is woefully behind on millions of both paper and electronic returns.
The agency recently informed Congress it has a backlog of 35 million unprocessed returns, a record for the month of July.
It blames staffing issues, new tax laws, stimulus checks and now the child tax credit, all of which go through its computers.
Congress gave the IRS the role of distributing hundreds of millions of stimulus checks over the past year without any additional staffing.
Irs Tax Refunds Are Delayed This Year Frustrating Taxpayers Who Are Waiting For $10200 Payments
- 14:01 ET, Jun 11 2021
AMERICANS are waiting for thousands of dollars in tax refunds from the IRS, and some are saying the relief couldn’t come soon enough.
Approximately 10million taxpayers may get a $10,200 payout if they filed their tax returns before the tax break in the American Rescue Plan became law.
Read our stimulus checks live blog for the latest updates on Covid-19 relief…
The American Rescue Plan Act signed on March 11 included a $10,200 tax exemption for 2020 unemployment benefits.
The exemption meant that checks sent during the pandemic weren’t counted as earned income.
In other words, you won’t get taxed on the COVID-19 relief you received in 2020.
The IRS started rolling out the first refunds two weeks ago and will continue to do so through the summer, but some people are running out of patience.
As many anxiously wait for the tax refunds to hit their bank accounts, financial advisors told the Detroit Free Press that few have received their refunds from the IRS.
“I still have not heard of anyone who has received a refund from the unemployment benefits tax change,” financial advisor George Papadopoulos said.
Filing A Tax Return Early Or Late
You may be anxious to receive your refund, but sometimes being an early filer works against you. Changes to the tax code or procedures often happen at the last minute, and refunds can be delayed while the IRS updates tax software. These delays are usually minimal, but can be avoided by waiting until the second or third week of the year. In 2012, recalls Holland, returns filed prior to January 26 were delayed more than a week, because the IRS added new anti-fraud measures on their computer systems.
Filing at the last minute can also delay your return, especially if you file on paper, due to the sheer volume of people filing at that time. Later filing also increases the possibility that you’ll fall victim to identity theft, where someone uses your Social Security number to file a fake return and claim a refund.
The IRS delays processing returns bearing a Social Security number that has already been filed, so if you file first, the thief will be out of luck. If the thief files first, your refund can be delayed for several months while the IRS verifies your information and tracks down the fraudulent return.
Also Check: Where Do I Pay My Federal Taxes
Irs Is Holding Millions Of Tax Returns Delaying Refunds
May 6, 2021 / 6:49 AM / MoneyWatch
The IRS is holding 29 million tax returns for manual processing, delaying tax refunds for many Americans, according to the National Taxpayer Advocate, an independent arm of the tax agency that looks out for consumers’ interest. The delays are prompting some taxpayers to fret over social media about spending weeks waiting in limbo for their money.
Typically, the IRS sends most refunds within three weeks of taxpayers filing their return. But this year is complicated by several issues, including a backlog of 2019 paper tax returns that the IRS was unable to process after shuttering its offices during the coronavirus pandemic.
A recent notice from the IRS said that some people may experience a longer than average wait for their payments. That may especially impact tax returns that need a correction due to changes made by the Recovery Rebate Credit a tax credit adjustment for people who were owed more stimulus money or to verify income for the Earned Income Tax Credit and Additional Child Tax Credit , according to the agency.
“This work does not require us to correspond with taxpayers but does require special handling by an IRS employee, so in these instances, it is taking the IRS more than 21 days to issue any related refund,” the IRS said in a March 18 post.
Tax Refund Delay: What To Do And Who To Contact
There are many reasons your tax refund could be delayed. Perhaps your numbers and your employers numbers didnt match. Or you accidentally skipped a lineor an entire form. Or maybe you claimed a credit that the IRS takes longer to check. This year, however, the mostly likely reason your tax refund is delayed is that you filed a paper return.There was an additional backlog of tax returns created by the COVID-19 pandemic. While IRS workers have been back at work for a while, there is always a chance this is still impacting your return. Of course, the reasons for a delayed tax refund before the coronavirus crisis may still apply. Read on for more reasons and how to prevent future delays.
Go beyond taxes to build a comprehensive financial plan. Find a local financial advisor today.
Recommended Reading: Do You Have To Do Taxes For Doordash
Tax Refund Delayed The Irs Still Has 335000 Tax Returns From 2019 To Process
- Alice Grahns, Digital Consumer Reporter
- 7:00 ET, May 21 2021
TAX season is officially over for another year – but the Internal Revenue Service still has 335,000 tax returns from 2019 to process.
Households due refunds will also have to wait another 60 days to get the cash, although this is a “conservative estimate”, the IRS said.
The backlog is down from 7million unprocessed returns at the start of 2021, IRS Commissioner Charles Rettig told senators this week, reports .
The IRS built up a huge number of unprocessed returns last spring when it closed its offices during the peak of the coronavirus crisis.
It meant the IRS had to suspend the processing of paper tax returns.
As a result, some people who are waiting for their 2019 return have now already received the refund for the 2020 tax season.
What’s Causing Some Hold Up
The IRS points to other key trouble spots that could be holding up some refunds. They include:
Claiming the Earned Income Tax Credit and electing to use one’s 2019 earnings, as was allowed by law, instead of 2020 earnings, on the 2020 return. The law was changed temporarily to allow taxpayers to still receive the credit even if they could not work during the pandemic last year but were able to work in 2019.
“We have some clients still waiting that filed as far back as March, there might be some from February as well that just haven’t been brought to my attention,” said Matt Hetherwick, director of individual tax programs for the Accounting Aid Society in Detroit, which offers free tax preparation for filers who claim the Earned Income Tax Credit for those working in low-paying to moderate-income jobs.
Antonio Brown, a CPA in Flint, said he has 11 clients still waiting for their refunds as of July 1.
He has one client who filed a return back in April and is owed a federal income tax refund of refund of $4,142 but the IRS system sent her a letter in late June that stated there was no record of a processed tax return. That letter was sent out, Brown said, even though he received a Form 9325 Electronic Filing Acknowledgment, which proves the return was accepted by the IRS system on April 3.
To make matters worse, he said, the client is trying to take out a mortgage to buy a home and needs a transcript of a filed tax return.
Don’t Miss: How To Find Out Your Tax Rate
What To Do If Your Tax Refund Is Delayed
The first thing to verify your tax return was accepted electronically, and verify the date your tax return was accepted by the IRS. If you filed your tax return manually, then you may or may not be affected since it takes a while for the IRS to enter the returns into the computer .
The next thing to do is visit the IRS page, Wheres My Refund page, to verify your tax return will be late. You may also be able to check on your refund date via your tax return software, or your accountant may be able to offer assistance in verifying dates. You can also check the IRS refund schedule to give you an approximate return time.
If your tax return is being delayed for another reason, then it may be a good idea to contact the IRS. It is possible there was an error in your tax return or there may be another problem holding up your refund.
Canada Revenue Agency: Your Tax Payment Date Is Delayed Again
The CRA understands the situation of Canadian taxpayers in 2020 and is extending the tax-payment deadline anew. After completing your tax duties, invest in Alimentation Couche-Tard stock for money growth.
More on: ATD.B
An important date Canadian taxpayers must remember is September 30, 2020. The Canada Revenue Agency is providing relief by extending the tax-payment deadline once more. Any 2019 Notice of Assessment you might receive that states a deadline other than the new date is not enforceable.
The CRA addressed the COVID-19 situation by moving the tax-filing deadline from April 30, 2020, to June 1, 2020. Along with the first move was delaying payment of taxes owed to the government to September 1, 2020. However, due to other priorities during the pandemic, another extension should lighten taxpayers financial burden.
Also Check: How Much Income To File Taxes
What You Can Expect
Look on the following list for the action you took whether that’s sending us your individual or business tax return or answering a letter from us. Then, open the action to see how long you may have to wait and what to do next.
How long you may have to wait: The IRS understands the importance of timely processing of tax returns and refund issuance. We have processed all error free refund returns received prior to April 2021 and continue to work the returns that need to be manually reviewed due to errors. We are continuing to reroute tax returns and taxpayer correspondence from locations that are behind to locations where more staff is available, and we are taking other actions to minimize any delays. Tax returns are opened and processed in the order received. As the return is processed, whether it was filed electronically or on paper, it may be delayed because it has a mistake including errors concerning the Recovery Rebate Credit, is missing information, or there is suspected identity theft or fraud. If we can fix it without contacting you, we will. If we need more information or need you to verify that it was you who sent the tax return, we will write you a letter. The resolution of these issues could take 90 to 120 days depending on how quickly and accurately you respond, and the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return.
Frustration Over Delayed Income Tax Refunds
ROCHESTER, N.Y. Millions of Americans are still waiting for their income tax refund from the Internal Revenue Service.
CPA Garrett Wagner discussed the backlog of refund checks Monday during News 8 at Sunrise.
Its just one of those things that are causing CPAs, myself including, so much stress this year, Wagner said. Last year we thought it was bad the IRS by the end of 2020 failed to process around eight million tax returns. We thought that was bad. As of June 2021, the IRS has not processed 35 million tax returns, just an astounding number.
Earlier this year the IRS moved the filing deadline for income tax returns from April 15 to May 15. While that created some delay in processing refunds, Wagner said its not the driving factor. The IRS for years has been short-staffed. When COVID hit, like a lot of organizations, it hit them really hard. Weve talked about other places that have been hit by this. The IRS was hit super-hard by the shutdown. Then we got those three rounds of recovery and rebate checks, which were great, but they had the IRS diverting their attention from other places. There were various tax law changes that slowed them down, unemployment taxation changes, and more. And then also the IRS sometimes puts out press releases that just say hey listen one of the reasons were so delayed, were just out of toner! So be patient!
Read Also: How To File State Taxes By Mail
Use An Online Program To Ensure Accuracy
If you dont opt to hire a tax professional, consider using an online program to cut down on the possibility of errors. When you are manually entering numbers on your tax form, it can be easy to put a number on the wrong line. This can lead to incorrect calculations and a delay in your refund.
One way to mitigate inserting numbers on an incorrect line is to complete the tax form using an online program, said Daniel R. Hill, CFP and president of Hill Wealth Strategies in Richmond, Virginia. As I share with my clients, typically, these programs will alert you when a number seems inconsistent with other numbers already entered or with numbers you inserted last year. These programs will help you provide accurate information. Additionally, using an online program will keep you abreast of the most current tax law changes for the current year. This way, you can file an accurate tax return knowing the online program double-checked information and applied the current years tax updates.
An accurate filing leads to a speedier return.
Irs Extends Tax Filing Deadline
In March, the GAO noted that such interest payments have been rising over the years. Also, the organization said that such delays would continue to cost billions of dollars until the agency modernizes its operations.
Probably this why, to make up for the backlog, the IRS extended the tax filing deadline to May 17 from April 15. Last year, the agency extended the 2019 tax deadline by three months to July 15, 2020, without penalties and interest, owing to the coronavirus pandemic.
Though you have until May 17 to file your tax return, it is recommended that you file your return as early as possible, especially, if you qualify for more payment on the basis of your 2020 income, than the 2019 income.
Recommended Reading: Which Tax Return Did You Have From Last Year
Claiming Earned Income Tax Credit Or Additional Child Tax Credit
A 2015 tax law called the Protecting Americans from Tax Hikes Act created built-in certain rules to help protect against tax fraud and identity theft. Part of this law includes a section that requires the IRS to withhold tax refunds for taxpayers who file a tax return claiming either the Earned Income Tax Credit and Additional Child Tax Credit .
Keep in mind it can take another week or so to receive the funds after released by the IRS. Returns claiming the EITC or ACTC filed after this date should not have a delay.
Tax Refunds Are Delayed For Millions Which May Trigger Some Trouble Ahead
Millions of people are frustrated that their 2020 federal income tax refunds are missing in action in the wake of what one tax official called “the perfect storm.”
And sadly, the angst could grow as many families receive the first payment of up to $300 a month for the advanced Child Tax Credit, while others are left on the sidelines wondering why they didn’t get all the money they’re expecting now.
Tax troubles in the 2021 season are bound to snowball as one problem rolls along and triggers another. At some point, things can improve but for many, the question is when.
Consider, for example, if your 2020 tax return hasn’t been processed yet and your family welcomed a baby last year. How is the Internal Revenue Service going to send you money as soon as July 15 for a child born in 2020? The child would be claimed on a 2020 return but wouldn’t show up on the 2019 tax return that the IRS would end up using to send out an advance now on your credit if that 2020 return isn’t processed yet.
The IRS said tax returns processed by June 28 will be reflected in the first batch of monthly payments for the advance Child Tax Credit scheduled for last Thursday But others could be questioning what happened to their money.
Typically, tax professionals say many people will receive their federal income tax refunds within a range of one to four weeks after electronically filing a return.
About 15.8 million returns needed further review, perhaps due to a mistake.
You May Like: How To Calculate Tax In California