Sneaky Reasons Your Tax Refund Is Being Delayed

Waiting on a tax refund can be agonizing. It only makes it worse to know that refund processing times are not supposed to be long. The IRS publishes anticipated wait times for your refund. There are reasons your tax refund is delayed if it does not come within their suggested timeframes.

So long as nothing is wrong with your return or refund deposit account, you can expect to get your money within a matter of weeks. According to GoBankingRates, the Internal Revenue Service dispatches most tax refunds in under 21 days after you file. This does depend on how you file though.

Filing electronically guarantees you the fastest way to get your refund. If you do your taxes electronically, you should receive your refund around three weeks later. This wait can be shorter if you elect for direct deposit. Filing a paper return can mean a wait of from six to eight weeks from the day the IRS gets your return.

The IRS offers several reasons why your tax refund might be delayed. A big cause of delay has to do with filing amended returns. Refunds issued from amended returns require around 16 weeks.

If you are filing an injured spouse claim, this will also lead to substantial delays in refund times. Injured spouses are individuals that have filed jointly with their spouses who did not receive a refund thanks to their spouse owing a debt that the IRS or the Bureau of Fiscal Service is collecting, according to Jackson Hewitt. In these cases, part or the whole of their anticipated refund has been applied towards the spousal debt in question.

There is a third and unusual reason for an extended delay per the IRS. Renewing your ITIN individual taxpayer identification number will cause refund processing delays. A way to avoid these kinds of unnecessary delays is to change your tax withholding instructions for the upcoming year. Consider 2024's most searched tax deductions when you are thinking about it. By doing this, you will hold on to the overpaid tax with each paycheck rather than have to wait on a refund for overpaying taxes throughout the year.

Some tax services will help you get around a potential tax refund processing delay upfront. They do this by offering Refund Anticipation Loans. RALs are third-party company loans issued by tax preparers, banks, or CPAs.

A Refund Anticipation Loan is based on your projected income tax refund. This loan will be repaid out of your refund once the IRS issues it. The obvious advantage to it is that it allows you to get your tax refund money in advance. Specific details depend on whether you use an online tax service or hire a professional.

There are downsides to these kinds of tax refund advance loans though. You expect that it will have to be paid back from your refund. What you may not be aware of is that there are high interest rates attached to them with some lenders. This interest adds up over time, especially if the IRS delays your refund. It could also cause you problems if the IRS adjusts your refund to a lower amount that does not repay the full balance. Instead of opting for a Refund Anticipation Loan, you might look into getting a bigger tax refund.