A tax refund is when a taxpayer gets compensation for the extra amount of tax they paid to the government. Tax season is dreaded by most, but when there’s a chance of tax refunds, people have something to look forward to. Taxpayers consider tax refund as a bonus with which they can tend to press financial matters.
A tax refund indicates the difference between the taxes you paid and the taxes you are owed. A taxpayer submits his or her tax to the IRS (Internal Revenue Service) by calculating the income tax he or she is owed through a tax return. It is sent via mail or e-mail to the IRS to review the given information. If the taxpayer paid more taxes than the amount owed, then the IRS will have to issue a tax refund for the taxpayer to receive. IRS sends out a schedule for the refunds which is called the tax refund schedule.
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Tax Refund Schedule
The whole taxpaying process is a complex and lengthy one. When it comes to tax refunds, the estimated time in which you can expect to receive your check depends on the way the tax return was sent in the filing date and claimed credits.
IRS claims most refunds to be issued in less than 21 days after the return has been accepted. Even though it’s not confirmed, but an estimated schedule can give you some idea of when you can expect your refund.
If you sent your tax refund electronically and it was a direct deposit. It can take 7-21 days for your refund to be received. If the tax return is sent electronically for checking, it can take a month. Also, if you sent your tax return via mail for a direct deposit. It can take up to three weeks for you to receive your refund and about two months if the return was sent through the mail for checking.
How It Works
It’s faster for IRS to review your tax return if you submit electronically than mailing it. After you send your return, IRS takes 24-48 hours to review to make sure that you submitted everything correctly. If no further review is required, the IRS will accept your return and send you an email to notify you of the acceptance.
Once you receive this, you can be sure that your tax return has passed the inspection and will take a more detailed look before scheduling your refund. Then your refund should arrive according to the estimated schedule mentioned above.
If you can, you should file your tax return early which can help you to get your refund sooner.
Why It Happens
There are a few reasons that can lead to a taxpayer receiving a tax refund. The reasons include:
- If there was an error made by the taxpayer in the Form W-4. (it is an IRS tax form that is used to calculate the correct amount that should be withheld for taxes from the paycheck)
- The tax owed was reduced by the taxpayer’s refundable credits
- If the taxpayer forgets to update Form W-4 regarding any recent changes (e.g. Birth of a child)
- If a taxpayer loses his or her job. They’d get a substantial refund according to the actual annual income
You might consider refunds as a pleasant thing. But it is better to calculate your estimated taxes accurately to avoid overpaying. Many people consider tax refund as an alternate savings plan and wait for the refund schedule eagerly.
Reasons for Tardiness
Despite having an estimated schedule for the tax refund, you can still get impatient. Sometimes your return can be delayed due to some unavoidable reasons. One of the reasons can be tax fraud. Tax fraud is when someone has access to your personal information and uses it to claim a refund in your name. Over the years, many have fallen victim to tax fraud. If you suspect that your identity has been stolen for such misuse, you must get in contact with IRS to report it.
There can be other reasons as well, such as errors in the tax return. If any numerical error is detected in your return, someone will have to physically look through your file to find the mistake which will take more time than usual.
Talking about time, if you file your return too early or in the last minute of the deadline. Your file can take longer to process. And we already mentioned the efficiency of filing your return electronically as filing via mail will slow things down. Also, an error in your bank account can cause your money to be sent somewhere else. In this case, IRS won’t get involved and you’ll have to personally contact the bank to fix the error.
Other than an error, filing an incomplete tax return can also trigger a longer wait since IRS will have to review your file again before processing it. Things getting lost in the mail are a daily occurrence and it can be the reason for your late refund as well. If you cannot use internet tools to find out the reason for your delay in refund. You should contact the local IRS office for inquiry and they might be able to trace down the issue.
If you want to get your refund early, it’s better to send your return early but not too early. As in before the initial date of submission. Send the return electronically instead of a mail.
To conclude, every taxpayer that over-paid their tax eagerly waits for the tax refund schedule. Yes, it might be exciting to find a check among your mail but a tax refund is not a good thing. It indicates that you took more taxes out of your paychecks than was deemed necessary. This just means that as a taxpayer, you need to be better at tax planning.