In case you haven't noticed over the years, the federal government tends to move at a very slow pace. This is particularly true of the IRS, where speed is something that rarely, if ever happens. Unfortunately, this is very frustrating when it involves your tax refund. As the COVID-19 pandemic has taken hold across the United States, it has slowed the IRS down even more. Thus, you may be wondering why your tax refund is taking so long to process. If you’re still checking the mailbox or your bank account to no avail, here are some likely reasons, as well as other tips you might want to keep in mind.
The IRS is Swamped
While the IRS was swamped pre-pandemic, closing its offices in 2020 only exacerbated the problem. Believe it or not, the IRS is still trying to catch up on processing 2019 tax returns, not to mention 2020 tax returns. Thus, the combination of closing its offices and having reduced staff to process tax returns has created the perfect storm for long delays, especially with refunds.
Filing Electronically Won't Help
Though it is far more convenient to file your tax returns electronically, this does not necessarily mean it will result in you getting your tax refund as quickly as you may have hoped. Since there are also millions of other taxpayers filing electronically, this creates the same level of backlog for IRS workers to process. However, even with these issues, most tax returns filed electronically will be processed within 21 days under normal conditions, so patience will need to be a top priority for you while you wait.
Your Return Contains an Error
If there is one thing you don't want to do in life, it is have an error on your tax return. After all, even when you submit a perfect tax return, it takes awhile to get your refund. However, should you submit a return containing an error, the delay can be of epic proportions. When this occurs, there is usually much back-and-forth between you and the IRS before the situation gets resolved. To avoid this scenario, always put your tax return in the capable hands of a CPA you know and trust to get the job done correctly the first time.
You Claimed the Earned Income or Child Tax Credit
When you claimed an additional child tax credit or the Earned Income Credit on your tax return, you likely did not give it a second thought. However, the IRS does. Since the federal government takes a very dim view of tax fraud, the agency usually looks over these tax returns very carefully before approving them and issuing refunds. In fact, the IRS chooses not to issue tax refunds to taxpayers claiming these credits until at least the middle of February each year. Thus, if you don't get your refund as quickly as you expected, this doesn't mean anything is wrong. Instead, someone in the IRS office is likely double-checking your tax credits before sending out your refund.
You Filed a Paper Tax Return
While you may still like to file your tax return the old-fashioned way with a paper return, filing your returns old school almost guarantees your tax refund will be one of the last ones sent out. If you don't believe this, consider that as of April 22, 2021, the IRS was still holding onto 29 million tax returns that require manual processing, of which 5 million were paper tax returns. Thus, while filing electronically does not always guarantee your tax return will go to the head of the line, it's a good bet that at least it won't be stuck at the very end.
You May be a Victim of Fraud or Identity Theft
If you are one of the thousands of unlucky taxpayers each year who become victims of tax fraud or identity theft, this will undoubtedly keep your tax refund in limbo until the situation gets resolved. Unfortunately, trying to convince the IRS that someone else is not you is much more difficult than most people imagine. In these situations, you will not only need the expert assistance of a CPA, but also an attorney who specializes in tax law. While some of these situations can take years to resolve, having experts to assist you from the start usually speeds up the process.
Think a Phone Call will Help? Think Again
When many taxpayers get frustrated waiting for their tax refunds, they tend to think that picking up their phone and making a call to the IRS will convince someone at the agency to wave a magic wand and instantly issue their refund. As nice as this would be, the real world does not work this way. Actually, it will be miraculous if you even get through to speak to an IRS representative. Also, keep in mind that unless you have waited at least 21 days for your refund from a return filed electronically or six weeks after filing a paper return, the IRS won't even look any further into the reasons why you haven’t yet received your tax refund.
Rely on Experts
Finally, now that you know some of the reasons why your tax refund may be late here in 2021, there are a few ways you can hopefully set yourself up for tax refund success. One of the best ways is relying on an experienced and trusted CPA to prepare and file your tax returns. By doing so, you will not only have someone preparing your taxes who is well-versed in the latest IRS rules and regulations, but also someone who can answer any questions you may have, helping you avoid unnecessary errors.
By working to make sure your tax returns are correct and having a little patience along the way, you should soon have a tax refund in your mailbox or bank account.