What Might Delay My Tax Refund?

Where's My Refund tools for both federal and state tax returns (you can find more information on these here) have made it much easier to track down a refund. However, it is still just as important that you minimize potential errors in your return that could cause IRS refund delays or account for misplaced refunds.

Refund Check

Refund Check
If you are electing to receive a paper check, it is extremely important that you double check the mailing address included in the tax return. Omitting information or using an incorrect address can result in delayed receipt of your tax refund check.

The direct deposit system allows filers to avoid tax refund delays and without the need to travel to and from their financial institution to make a deposit. This has dramatically improved the speed with which you can receive your money but it also presents additional opportunities for errors to occur. With direct deposits, the most common cause of delay is inaccurate bank routing information and/or account number. If you are opting for a direct deposit you want to always make sure this information is entered correctly.

Check or Direct Deposit is not the Only Way to Receive Your Refund

Did you know you can use your refund to buy U.S. bonds and even fund a retirement account? When filing, taxpayers can use a form 8888 (aka Allocation Of Funds form) to designate how they would like their refund distributed. This form should be submitted to the IRS with your income tax return. There are five distribution options which can be selected:

  1. Buy series I bonds (up to $5,000 & purchased in increments of $50.00)
  2. Into an Individual Retirement Account (IRA)
  3. Direct deposit to checking/savings account
  4. Direct deposit into another approved savings vehicle (money market, brokerage account, etc)
  5. Requesting a paper check

Splitting Your Tax Refund

When taxpayers receive a refund from the IRS, they have the option to “split” any portion of it. They can divide their refund into separate amounts and deposit the money into more than one account or financial institution, or use any portion of the refund to buy U.S. Savings Bonds (up to $5,000). As many as three savings bond registrations per refund are allowable. They can also opt to receive a portion of their refund through a paper check. Note: each deposit amount must be at least $1.00.

Refunds can be split into as many as three banks or financial institutions within the United States. Taxpayers also have the option to deposit the funds into a health savings account, education savings account, retirement account or into a TreasuryDirect account (a mechanism to hold various Treasury securities, including bills, bonds, Floating Rate Notes, Treasury Inflation-Protected Securities (TIPS), notes, and savings bonds).

Direct Deposit Issues That Cause Tax Refund Delays

If there are any problems with your direct deposit, then a paper check will be issued. This can occur if any of the following circumstances apply:

  • You have requested to put a joint refund in an individual account, and your financial institution does not allow that action.
  • The name on the return does not match the name on the account in which you would like to make the deposit.
  • There have already been three direct deposits for tax refunds delivered to the same account in one tax year.
  • The account number is invalid.
  • You have filed your tax return after the end of the following year.

The IRS is not responsible for mistakes regarding direct deposit information. You should ensure that your information is entered correctly so that your refund goes into the correct account. The IRS will not contact you if they have problems with your direct deposit; they will automatically issue a paper check.

Filing has certainly gotten much simpler in recent years. Deciding on how you would like to receive your refund, with all the options that are now available may not be as simple.

See the following for information on the standard IRS refund times. you can expect this year.

Q&A: I have not yet received my tax refund?

The IRS attempts to issue refunds as quickly as possible, however, in some instances returns can take additional time to process. If it has been over twenty one days since you e-filed your return and it was accepted, it is possible that your refund may have been delayed due to an error or some other problem. In order to determine this you may contact the IRS at 1-800-829-1040. Before calling you should always check the status of your refund on the IRS' Where's My Refund? tool.

Please note: if the IRS determines they need additional time to process your return they will often communicate this to the taxpayer through a United States Postal Service letter.

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