What To Do With Your Tax Refund
Through Feb. 4, 2022, over 4.3 million people have received their tax refund at an average of $2,201 per person, according to the IRS. And with many Americans unable to afford a $1,000 emergency, a refund of that size is extremely helpful.
If you receive a tax refund, here are some starting points of where you can send those funds:
How To Track Your State Tax Refund
Its common for state refunds to be refunded to taxpayers before Federal refunds. Timings do vary based on the state you live in, though.
To start the process, youll need to file your Federal tax return, but you dont need to wait for your Federal refund before you receive your state refund.
Take note, you can disregard this if you live in a state like Alaska or Texas as they dont have any state income taxes.
Irs Continues Work On Inventory Of Tax Returns Original Tax Returns Filed In 2021 To Be Completed This Week
IR-2022-128, June 21, 2022
WASHINGTON Following intensive work during the past several months, the Internal Revenue Service announced today that processing on a key group of individual tax returns filed during 2021 will be completed by the end of this week.
Due to issues related to the pandemic and staffing limitations, the IRS began 2022 with a larger than usual inventory of paper tax returns and correspondence filed during 2021. The IRS took a number of steps to address this, and the agency is on track to complete processing of originally filed Form 1040 received in 2021 this week.
Business paper returns filed in 2021 will follow shortly after. The IRS continues to work on the few remaining 2021 individual tax returns that have processing issues or require additional information from the taxpayer.
As of June 10, the IRS had processed more than 4.5 million of the more than 4.7 million individual paper tax returns received in 2021. The IRS has also successfully processed the vast majority of tax returns filed this year: More than 143 million returns have been processed overall, with almost 98 million refunds worth more than $298 billion being issued.
IRS employees continue working hard to process these and other tax returns filed in the order received. The IRS continues to receive current and prior-year individual returns and related correspondence as people file extensions, amended returns and a variety of business tax returns.
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What Do These Irs Tax Return Statuses Mean
Both IRS tools will show you one of three messages to explain your tax return status.
- Received: The IRS now has your tax return and is working to process it.
- Approved: The IRS has processed your return and confirmed the amount of your refund, if you’re owed one.
- Sent: Your refund is now on its way to your bank via direct deposit or as a paper check sent to your mailbox.
What Could Delay My Tax Refund
Heres a list of reasons your income tax refund might be delayed:
- Your tax return has errors.
- Its incomplete.
- Your refund is suspected of identity theft or fraud.
- You filed for the earned income tax credit or additional child tax credit.
- Your return needs further review.
- Your return includes Form 8379 , injured spouse allocation this could take up to 14 weeks to process.
If the delay is due to a necessary tax correction made to a recovery rebate credit, earned income tax or additional child tax credit claimed on your return, the IRS will send you an explanation. If theres a problem that needs to be fixed, the IRS will first try to proceed without contacting you. However, if it needs any more information, it will write you a letter.
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Tax Penalties For Late Filing
Youll be charged 5% of your unpaid tax bill for every month that your tax return is late. This will rise until it reaches 25% of your unpaid taxes.
But if you file and you havent paid yet, youll owe less as long as you deal with the error as soon as possible.
For each month you fail to pay, youll receive a penalty of 0.05% of your unpaid taxes. This can rise to a maximum of 25%.
Take note that interest rates equal to the short-term Federal interest rate will be charged on your unpaid tax bill. An additional 3% will be added on top of this.
Taxpayers who decide to file for a tax extension anyway will need to make sure they file by October 15th.
Tax Filing Season Begins Jan 24 Irs Outlines Refund Timing And What To Expect In Advance Of April 18 Tax Deadline
IR-2022-08, January 10, 2022
WASHINGTON The Internal Revenue Service announced that the nation’s tax season will start on Monday, January 24, 2022, when the tax agency will begin accepting and processing 2021 tax year returns.
The January 24 start date for individual tax return filers allows the IRS time to perform programming and testing that is critical to ensuring IRS systems run smoothly. Updated programming helps ensure that eligible people can claim the proper amount of the Child Tax Credit after comparing their 2021 advance credits and claim any remaining stimulus money as a Recovery Rebate Credit when they file their 2021 tax return.
“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop these past several months to prepare,” said IRS Commissioner Chuck Rettig. “The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don’t face processing delays. Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year. And we urge extra attention to those who received an Economic Impact Payment or an advance Child Tax Credit last year. People should make sure they report the correct amount on their tax return to avoid delays.”
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New Report Critical Of Irs Progress
The accumulation of paper returns has been a troublesome development since the COVID-19 pandemic shutdowns shook up the system. While some progress has been made, it’s not enough to get the job done.
Fortunately for most taxpayers, e-filed returns have generated refunds quickly. About 137 million million returns filed in 2022 were filed electronically.
About 8 million federal returns filed by paper were mailed to the IRS so far this year. More will arrive as some taxpayers who requested extensions also will file by paper. The IRS maintains that its critical for those who still need to file a tax return this year to file electronically, if possible.
The IRS has said it is aiming to crush the backlogged inventory this year, and I hope it succeeds, wrote National Taxpayer Advocate Erin M. Collins in midyear report to Congress, which was released Wednesday.
Unfortunately, at this point the backlog is still crushing the IRS, its employees, and most importantly, taxpayers, Collins said.
IRS commissioner: Backlog of unprocessed returns to be eliminated by end of year
The IRS had a backlog of 21.3 million unprocessed paper tax returns by the end of May, an increase of 1.3 million over the same time last year, according to the report issued Wednesday by the National Taxpayer Advocate. That backlog includes amended paper returns.
Collins noted that processing delays are creating “unprecedented financial difficulties for millions of taxpayers and outright hardships for many.
Autofill Is Your Friend:
Theres a lot of new information to take in this tax season. But if youve been receiving your COVID-19 benefits through your CRA My Account, that is going to take almost all of the worry out of it, Gorman says.
Any NETFILE-certified tax software will link up to your My Account, which will then populate your tax return with the information from your tax slips if you use the autofill feature.
If youre filing with pen and paper, both large tax preparation firms and independent tax accountants will likely let you drop off your documents and pick up your completed returns, minimizing in-person contact.
And free tax clinics, where trained volunteers at community organizations help low-income Canadians with a simple tax situation, started to provide tax support remotely, including via video call, last year.
The CRA said early this year it will put more than $10 million over three years into a new grant program to help these organizations offset some of their costs.
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Do You Need To Repay Cerb And Other Covid Benefits By The Tax Deadline
You do not. If youve received financial assistance you werent eligible for, youll have to return the money to the government. However, that process is separate from your tax return. So far, the CRA has not specified when repayments of federal COVID-19 benefits received in 2020 are due.
Still, unless you paid back the funds before the end of 2020, any income support you received last year will show on your tax slips. Youll have to report the income on your 2020 tax return and may have to pay income tax on it. This raises the possibility youll pay tax on 2020 benefits that youll eventually have to pay back. If this happens, the CRA will eventually make you whole but you may have to wait until you file your 2021 tax return in the spring of 2022 until that happens.
Any repayments made in 2021 will be recognized on a T4A slip for 2021, which will allow the individual to claim a deduction on the 2021 income tax and benefit return, the CRA told Global News via email.
The process is based on general tax rules in the Income Tax Act that apply to repayments of taxable income, the CRA has previously told Global News.
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What About My State Tax Refund
What weve covered so far applies to federal tax refunds. As you might expect, every state does things a little differently when it comes to issuing tax refund.
Generally, you can expect to receive your state tax refund within 30 days if you filed your tax return electronically. If you filed a paper tax return, it may take as many as 12 weeks for your refund to arrive. To find out the status of your refund, youll need to contact your state tax agency or visit your states Department of Revenue website.
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Are There Any Expected Tax Refund Delays
Yes, tax refund delays are common. The IRS is required by federal law to withhold tax refunds for taxpayers who claim Earned Income Tax Credits and Additional Child Tax Credit until at least Feb. 15, 2022. Keep in mind it can still take a week to receive your refund after the IRS releases it. So some people who file early may experience delays while awaiting their refunds. Refunds should be processed normally after this date.
Note: There may be delays for the 2021 tax year. The IRS continues to work through a backlog of tax returns , including those with errors and amended returns.
The IRS recommends filing your tax return electronically for faster processing and tax refund payments.
Also note that new identity theft protections and anti-fraud measures may hold up some refunds, as some federal tax returns may be held for further review.
I Received A Form 1099
If you claimed itemized deductions on your federal return and received a state refund last year, you will receive a postcard size Form 1099-G statement. This form shows the amount of the state refund that you received last year but does not mean that you will receive an additional refund. Generally, your State income tax refund must be included in your federal income for the year in which your check was received if you deducted the State income tax paid as an itemized deduction on your federal income tax return. Please view the Frequently Asked Questions About Form 1099-G and Form 1099-INT page for additional information about Form 1099-G and Form 1099-INT.
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When Will I Get My Tax Refund
If you filed online using NETFILE, it can take up to 2 weeks to receive your tax refund. Signing up for direct deposit on CRA My Account will get you your money 3-5 days faster than receiving a cheque in the mail. If you filed by mail, it may take up to 8 weeks.
If you live outside Canada and file a non-resident personal income tax return, it may take up to 16 weeks to receive your refund.
Curious about when your tax refund will arrive? You can track it in your CRA My Account after the CRA receives your return. There youll find the date your return was received, when to expect your refund, and the exact amount.
Why You May Owe More Taxes This Year:
The first round of emergency benefits Ottawa rolled out during the pandemic did not have any tax withheld at source. If you received either the CERB or the Canada Emergency Student Benefit , youll have to include 100 per cent of those payments in your 2020 tax return.
How much tax youll actually end up paying depends on your overall income for 2020. For example, if you made $27,000 from work in 2020 and received $8,000 worth of CERB, your taxable income for the year would be $35,000. Both the income you received from CERB and your job would be taxed in the same way.
Its possible you wont have to pay any tax at all.
If youre under $12,000 in total income for the year, you dont have to worry about any income taxes next year, Frank Fazzari, a chartered professional accountant at Vaughan, Ont.-based Fazzari + Partners, previously told Global News.
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With the second round of COVID-19 benefits that became available in September the CRB, the Canada Recovery Sickness Benefit , and the Canada Recovery Caregiving Benefit the government has been withholding 10 per cent in tax at source. This, however, may be insufficient to cover your tax liability, Jamie Golombek, managing director of tax and estate planning with CIBC Private Wealth Management, has warned.
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You Have Not Updated The Status Of My Refund In A While When Will I Receive It
Each return processes through multiple steps. We recommend you file electronically and include all documentation to ensure we can process your return/refund as quickly as possible. Please check back on the status daily. If we require additional information, we will contact you through U.S. Postal Service mail.
Exceptions To The Refund Timetable
There are exceptions to the refund timetable, however.
The first major exception is due to the Protecting Americans from Tax Hikes Act. PATH means that if youre claiming either the Additional Child Tax Credit or the Earned Income Tax Credit, expect the IRS to withhold your refund until February 15th.
The PATH act means your entire refund will be delayed, rather than just the amounts pertaining to these two credits. Taxpayers in this situation shouldnt expect to receive their refund until the following week.
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If Your Refund Isnt What You Expected
If your refund amount isnt what you expected, it may be due to changes we made to your tax return. These may include:
- Corrections to any Recovery Rebate Credit or Child Tax Credit amounts
- Payments on past-due tax or debts, offset from all or part of the refund amount
For more details, see Tax Season Refunds Frequently Asked Questions.
Request Direct Deposit Of Your Refund
According to the IRS, eight out of ten taxpayers use direct deposit to receive their tax refunds faster. This option is available to you whether you file online or by paper tax return.
If you dont have a bank account, you may want to consider other options, such as a prepaid debit cardthe IRS can issue your refund to one of these cards. But be warned: prepaid debit card providers can charge a lot of fees for everyday services like reloading the card, so shop around before deciding whether this is a good option for you.
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Wheres My State Tax Refund Maryland
Visit the Comptrollers website to check the status of your Maryland tax refund. All you need to do is enter your SSN and your refund amount. Joint filers can check their status by using the first SSN on their return.
According to the state, it usually processes e-filed returns the same day that it receives them. That means you can expect your refund to arrive not too long after you file your taxes. On the other hand, paper returns typically take 30 days to process. For security reasons, it is not possible to verify any of your tax return information over the phone.
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Are Tax Refunds Delayed 2022
The processing and refund delays seen in 2021 and likely to be repeated in 2022 can be traced in part to pandemic-related challenges, as well as issues with IRS staffing and funding. … Still, the IRS maintains that most taxpayers will receive the tax refund owed to them within 21 days of when they file.
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