5 Things to Know About Your Tax Refund
Tax refunds exist because you may at times pay extra to the government. Since the extra payment is usually not rolled-over, the IRS gives employees, companies, and businesses a way to seek tax refunds before closing the books. It’s no secret; tax refunds can be complicated. It can often be hard to know important information, like the time it takes to process, permitted payment methods, different factors affecting the length of processing, and even how to check your tax refund application status. This article will get you up to speed with all of these.
Period It Takes to Process Tax Refunds
Typically, anything government-related takes time, several months, and in worse case scenarios, even years. But for the IRS to process tax refunds, it usually takes a minimum of 21 calendar days for the majority of refunds. Of course, this is only if you use IRS’s e-filing system and select direct deposit as your method of receiving the refund. The period also varies, depending on the filing method. For instance, filing paper returns to seek a refund and to use direct deposit will take about 30 calendar days, which is more than if you file electronically. The difference in the time it takes for the IRS to issue a tax refund for these two methods is because the latter uses USPS, which can take up to five days to deliver the mail. However, keep in mind that the IRS itself doesn’t guarantee the time it will take to issue refunds when you use either payment method.
Refund Payment Methods
So which payment methods does the IRS use to issue tax refunds? There are several. One, you can choose to receive the funds directly to your bank’s or credit union’s checking or savings account. The second method is direct deposit to your debit card. You can also choose to buy yourself or someone else up to $5,000 in paper or electronic U.S. Savings Bonds. A split refund is also an option that allows you to divide the funds in any proportion and direct deposit to up to three different accounts with local financial institutions as long as they are all registered under your name.
Factors Affecting Refund Processing Time
As stated above, different factors come into play that could affect the time it takes for the IRS to issue a tax refund.
- The method of refund payment is just one. Direct deposit is the fastest method available. However, your bank may withhold the cash for 24 hours before crediting your account. Relative to a paper check, direct deposit takes a shorter time.
- Method of filing is also crucial, as highlighted above, electronic filing is faster than paper. Accuracy of filing can also affect the refund processing time and ultimately the amount of refund. The IRS may also at times hold back a portion or all of your refund for further review.
- Additionally, different deductions take longer to process than others.
- Timing also does matter. For the latter, last-minute filing could take longer, and other factors like emergencies and holidays can affect how long the IRS takes to process and issue a refund.
Tracking Your Tax Refund Status
The IRS has more straightforward tools online that can help any filer track the status of their refund. You can track refund status using the IRS2Go app available on both Google Play and Apple App Store.
Alternatively, go to IRS.gov, click the Refund tab, and select “Where’s My Refund?” from the available options. You will then be required to enter your Social Security Number, Filing Status, and the refund amount stated in your return.
Tax Refund Status and Their Meaning
The IRS can show you either of these three messages: Return received, refund approved, or refund sent. Refund received indicates the IRS has received your tax return, refund approved shows your refund has been reviewed and approved, and refund sent means your tax refund is on the way.