All you need to know about an expected delay in tax refunds in 2020 due to COVID-19 pandemic

All you need to know about an expected delay in tax refunds in 2020 due to COVID-19 pandemic

All you need to know about an expected delay in tax refunds in 2020 due to COVID-19 pandemic

In response to the outbreak of the pandemic COVID-19, the Federal Government had delayed the deadline for filing Federal tax returns and for tax payment as well. However, it was advised that if you had to receive a tax refund from the IRS then it would be wise to file the tax returns soon. Due to the coronavirus and the social distancing norms, it was not only difficult for the taxpayers to prepare and file the returns but also for the IRS staff to process the refunds.

In these difficult times, it is always good to have some additional cash and everyone needs this additional amount but the tax refunds for 2020 would be delayed. 

IRS Operations with a reduced workforce

The IRS offices were closed across the entire country and it was operating with limited staff and resources. The most important task which the IRS has been doing in the past two months was the issuing of Coronavirus Stimulus Payment to around 150 million Americans which can be termed as a “mission-critical” function.

Due to the outbreak of the pandemic COVID-19, the IRS had limited the services it was rendering. The live phone help has been suspended and even the Taxpayer Assistance Centers were closed. Still, the official webpage of the IRS says that they have been carrying out the critical functions pro-actively. Specifically, the IRS has been processing Federal tax returns and issuing refunds to the Americans even with limited staff. From 1st June 2020, many IRS staff members would have returned to their offices for performing those tasks which cannot be done from home. These staff members on resuming work would begin with the backlog of work they have which would mainly consist of processing tax returns and issuing refunds to the people.

Method of tax return filing – Reason for delay

According to the IRS, the fastest method by which you can receive your tax returns on time is by filing your tax returns electronically. Most of the taxpayers who would use the e-filing method and would choose Direct Deposit would receive their tax refunds within 21 days of the filing. However, there would be delays in obtaining tax refunds by those taxpayers who would opt for the paper return method.

More than 10% of the American population still uses the paper method for filing their tax returns. The closure of the IRS offices means that IRS would not be able to process those returns which have been mailed in. So, when the processing of returns would be delayed then obtaining a refund would also be delayed.  Currently, it is unclear as to by when the IRS would be resuming the processing of those returns which have been filed by paper.

According to several reports, by 1st May 2020, the IRS had received around 125 million Federal Tax returns and it had processed 113 million tax returns approximately. There has been a 7.2% drop in the refund processing rate of the IRS due to the pandemic COVID-19.  However, the average tax refund this year is $2973 and the IRS says that it does not expect any delay in issuing the outstanding refund requests as well.

Tax Refund Status

Usually, the tax refunds are issued to the taxpayers within less than 21 days of filing the tax returns. You would be able to track the status of your Federal Tax refund on the official website of the IRS after 24 hours of filing the tax returns.

The three important things needed for checking your Federal Tax refund status are

  1. Social Security Number or Taxpayer Identification Number
  2. The exact amount that would be refunded
  3. Your filing status

Other causes for tax refund delays

Apart from the coronavirus, there can be some other reasons which would cause a delay in the process of obtaining tax refunds. In case, you have filed your tax returns too early and have claimed the Earned Income Tax Credit or the Additional Child Tax Credit then you will have to wait longer there might also be a delay if you have filed your federal tax returns either faster or later.Moreover, other causes for delay in obtaining your tax returns could be due to wrong Social Security Number, incorrect bank account number, misspelling of your name, wrong calculations or you have outstanding debts such as back taxes, child support, or Federal Student Loan, etc.

You can keep a tab on your Income-tax refunds by checking your Tax Refund Status regularly and understanding the details associated with tax refunds.

IRS Tax Refund

IRS Tax Refund

IRS Tax Refund

IRS Tax Refund,According to the information available to the IRS, every year a substantial number (about 75-80%) of the taxpayers are eligible for tax refunds in some form or the other. Of course, there are different clauses and conditions when it comes to tax refunds, but the general idea remains the same.

If you have paid more taxes than what you are liable for, the government issues a refund for the same, as long as you meet all the conditions.

You have filed your tax returns and realize that the government owes you a certain amount of money. That can be both exciting as well as confusing. It is exciting because you are eligible for a refund and confusing because you have no idea when you can realize those refunds.

Tracking IRS Tax Refunds

The IRS has several useful tools available for its taxpayers, but the Refund tracking tool is something that all the taxpayers rejoice.

If you visit the IRS website, you get an option of “Where’s My Refund”.

This is the most accurate medium for checking your tax refunds, as the IRS updates the entities every 24 hours. You need not be a techno wiz craft to use the tool as well. All that you need is your Social Security Number or Employee Identification Number, whichever was used for filing of taxes. Up next, you would need the filing status, such as single, married jointly filing or married filing separately etc. And lastly the exact amount of tax refunds.

Individuals who have filed their taxes electronically can track their refunds after 24 hours of their tax filing. On the other hand, if you have done it the old school way you will have to wait for a minimum of four weeks. The usual turnaround time for processing of refunds is about three weeks, but it at times it might take a bit longer owing to the fact that the IRS is underpowered when it comes to resources.

Don’t forget to check out Best Investments for Boosting Your Tax Refund

Missing Refunds

While opting for tax refunds, the safest and easiest option is to provide your details and the amount gets credited directly into your bank account. As you do not have to worry about the check and its traversal, it is the safest option as well. And the quickest as well, since you do not have to visit the bank or ATM to encash the same.

Quite a few individuals or taxpayers to be specific opt for getting the refunds in the form of checks. In fact, the IRS does not allow more than three deposits per year for a specific bank account, so you might have to resort to checks in such cases. Though is it not a usual occurrence, there are chances of the same getting lost from time to time. You should immediately reach out to the IRS in such a scenario to trace your missing check. There are two possible outcomes when it comes to a missing check, either it was cashed or it wasn’t. The IRS will investigate and find out if the check has been cashed or not. If no, they will send out a replacement check for you. If yes, the IRS then starts working towards a claims package. Once all the formalities are over, they will issue a replacement check.

If you have opted for filing your tax returns electronically, you can expect the refunds within 21 days of the filing.

But when it comes to refunds for paper returns, the IRS takes about 6-8 weeks and the duration reaches 8-12 weeks if there are amendments to the returns. Make sure you wait for the mentioned timelines before reaching out to IRS regarding the same.

Looking to get bigger IRS tax refunds, click here to know how.