There are times even better than Christmas — like the day you get your federal tax refund. But unlike Christmas, you never know precisely when tax refund day will come.
The good news is the IRS turns around most refunds pretty quickly. Just a few years ago, getting a refund could take months, and there was no way to check the status online. Thankfully, filing taxes has changed quite a bit over the years.
Today’s tax preparation software from a company like H&R Block walks taxpayers through the maze of income streams, tax credits, and overlooked tax deductions. And there are now more ways than ever to know when your refund is coming.
An Overview of Tax Refund Timelines
The IRS says they issue most refunds within 21 calendar days of processing an income tax return. But several factors can impact that timeline.
People who e-file their returns typically get their refunds faster than those who mail a paper return. Choosing to have your refund direct deposited is also a quicker option than waiting for a paper check.
However, if your return includes refundable tax credits, such as the earned income tax credit (EITC) or the additional child tax credit (ACTC), there is one date you need to know. The Protecting Americans from Tax Hikes Act prevents the IRS from issuing EITC and ACTC refunds before mid-February. The IRS estimates that even early filers claiming these credits won’t see their refunds hit their bank accounts or debit cards until the first week of March.
So even if you filed your return on the first official day of tax season (Feb. 12, 2021, for the 2020 tax year), you still have to wait a while for your refund if you claimed one of those tax breaks.
If you’ve filed your return and want to know when you can expect your refund, the IRS offers a couple of methods for tracking it.
Tax Refund Status & Tracking
Taxpayers who owe money to the IRS usually wait until the tax filing deadline to send their payment, but those who are expecting a refund want it now. The IRS knows you’re eager and created two tools to help keep you from compulsively checking your mailbox each day.
IRS2Go
The IRS created IRS2Go, a mobile app for Android and iOS devices. You can download it from the App Store or Android Marketplace. The app is pretty bare-bones, but you can use it to do things like check your refund status, make a tax payment, or find free tax preparation assistance.
Where’s My Refund?
The second tool is a page on the IRS.gov website called Where’s My Refund? Just enter your Social Security number, filing status, and the amount of your refund, and the IRS will let you know when you can expect to receive your check or direct deposit.
You can use this tool starting 24 hours after electronically filing your return or four weeks after mailing a paper return. Don’t bother checking multiple times a day, though. According to the IRS website, they post updates daily, usually overnight.
5 Ways to Speed Up Your Tax Refund
The IRS processes more than 250 million federal tax returns each year, and roughly one-quarter of those are paper returns. So you can imagine the monumental effort it takes to process all those returns and issue refunds.
You can help lighten the load and speed up your refund by following these tips.
1. Be Organized
The more organized you are, the sooner you can file and the less likely you are to make avoidable errors that hold up your return.
Keep all your tax documents — including your W-2 forms, 1099 forms, and deduction statements — in one place so they’re easy to find when you’re ready to file. There’s nothing worse than filing delays caused by your filing system.
2. Use Online Tax Prep Software
Use tax software to guide you. There are numerous options available, including H&R Block. They’re usually much faster than attempting to figure out the IRS forms and schedules on your own, and the software ensures you comply with current tax law and maximize your deductions.
The time it takes to finish your return depends on how many income streams, deductions, and investment income sources you have. According to the IRS, it takes the average nonbusiness taxpayer about three hours to complete and submit their tax forms. Around 90% of those forms are either professionally prepared or done by a taxpayer using software, which is faster and more user-friendly.
3. File Electronically
How you file your return plays a considerable role in how quickly you receive your tax refund. You generally have two options: paper filing or electronic filing (also known as e-filing).
If you paper file, it takes three to four weeks for the IRS to process the return and acknowledge your refund. If you e-file, you get a notice of arrival within 24 hours and confirmation of refund within 72 hours. However, due to the COVID-19 pandemic, the IRS may take even longer to process your tax return.
4. Request Direct Deposit
Once the IRS accepts your tax return and approves your refund, you can choose to have your money directly deposited in your bank account within a week. If you decide to have a paper check sent through the mail from the IRS, you add at least another two weeks to the process.
5. File on a Sunday or Monday
If you can control it, try to file on a Sunday or Monday to maximize the likelihood you receive your refund before the weekend. If you file on a Friday, the IRS may not process your return until the following week.
Final Word
Some factors that can affect the speed of your refund — like software glitches and the filing volume around the time you submit your taxes — are outside your control. The IRS tends to process returns faster for people who file early. The closer we get to the tax filing deadline, the busier the IRS gets, and the longer it takes them to process your return and issue a refund.
No matter what steps you take to ensure a quick refund, we’re all at the mercy of bureaucracy.
The reality is once you hit that “e-file” button or put your return in the mail, there’s nothing more you can do to speed up your refund. Checking the status of your refund on the IRS2Go app or the Where’s My Refund? tool every hour may bring you peace of mind, but it won’t bring you that money any faster.
Remember the adage “A watched pot never boils”? If you’re expecting a refund, file your return, relax, enjoy life, and eventually, you will find a pleasant surprise in your mailbox or checking account.
Source: moneycrashers.com