7 Reasons Your IRS Refund Is Delayed — and What You Should Do About ItPersonal Taxes
You wait a couple weeks, and no direct deposit from the IRS has hit yet.
You check again the following week — after all, the IRS says to give them at least 21 days to process refunds on e-filed returns because apparently they “issue most refunds in less than 21 calendar days” — and still nothing.
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7 Reasons Your Tax Refund Is Delayed
So what gives? Here are seven reasons why your tax refund might be delayed.
After these reasons, I also give you a few action steps you can take, including how to request an expedited refund if you really need that cash.
1. You took certain credits.
Now, there are certain credits that typically automatically cause the IRS to take longer processing your return.
One of those is the Earned Income Tax Credit, which is a credit that taxpayers can get if they have earned income less than a certain amount for their filing status and number of children or relatives claimed as dependents and meet a few other rules.
The IRS is a stickler about this credit. And that is because the IRS believes that between 21% and 26% of Earned Income Tax Credit claims are paid erroneously with some of those mistakes just being mistakes but others caused as a direct result of fraud on the taxpayer’s part.
So for this reason refunds for tax returns that claimed the Earned Income Tax Credit are typically delayed because the IRS thinks that one out of five or one out of four Earned Income Tax Credit claims that it pays out are paid erroneously and so it wants to take some extra time to review returns that claim this credit.
There are similar kinds of delays for returns that claimed other credits as well, such as the Additional Child Tax Credit.
2. You paper filed your return.
It should come as no surprise that electronically filed tax returns are, in general, processed a lot faster than paper filed tax returns.
So if for whatever reason you paper filed your tax return, then your refund might take longer than expected to arrive.
3. Your return had math mistakes.
We all make mistakes, and it’s fairly easy to make mistakes on tax returns especially if you’re using an off-the-shelf tax software that does its best to do your tax return correctly, and they usually do, but like all tools, tax software programs are tools and are only as good as the one wielding them.
So obviously if the IRS detects some error or mistake in your tax return, that could cause them to have to recalculate some items on your return, which obviously takes time even if it’s all done in a computer, and that would cause your refund to be delayed.
Now, for this particular 2022 tax filing season for 2021 tax returns, the IRS has specifically singled out two kinds of mistakes that could cause a refund to be delayed.
Really, any mistake could cause a refund to be delayed, but the IRS has singled out two kinds of mistakes in particular, and those are mistakes pertaining to the Recovery Rebate Credit as well as mistakes pertaining to the Child Tax Credit.
I imagine the IRS singled these out because so many people are eligible for these credits, but there’s a massive twist to them, and that is that many taxpayers already received a portion or, in the case of the Recovery Rebate Credit, potentially all of the credit in advance.
So there’s this reconciliation that has to be done on the tax return for these credits. For the Child Tax Credit, you have to reconcile on Form 8812 how much you’re actually eligible for versus how much you received in advance during the last six months of 2021.
So the IRS sent people eligible for this a form called Letter 6419, which basically told folks how much in advanced Child Tax Credit the taxpayer had received and the number of children that amount was based on according to IRS records.
Of course, to make matters worse, the IRS put out Fact Sheet 2022-5 earlier this year stating that for some people, their Letter 6419 was incorrect:
A limited group of taxpayers may receive an IRS letter with an incorrect amount of the payments received. Those in this small, affected group generally involve people who moved or changed bank accounts in December 2021, and their checks were returned as undeliverable, or their direct deposits were rejected.
Of course, you can log on to your Child Tax Credit portal, as I covered last year on this channel, to see your actual amount and compare it to your Letter 6419.
And it’s the same thing with the Recovery Rebate Credit, though that one is a bit more straightforward. There was Letter 6475 the IRS sent out to people indicating the third stimulus payment they received and on their tax return, taxpayers have to reconcile that amount with the actual 2021 Recovery Rebate Credit amount they are eligible for. And for most people, those numbers will be the same.
But this is all to say that even for “simple” tax situations this year, because most Americans received a third stimulus payment and many Americans received advanced Child Tax Credit payments — even for these “simple” tax situations — there is room for error.
And it’s possible that your return had some mistakes because sometimes tax softwares aren’t the best at asking the right questions of their users to get to the right answer for the return.
4. Your bank account or mailing address information is outdated.
Now, one nice thing about some tax software is that if you use it year after year, you don’t have to re-input a lot of your basic information such as your name and address.
So imagine this scenario because this happens more than you might think.
You started your tax return in late January or early February after you got your W-2 and you ran through it in the software, and you input your bank information for your refund, but then you noticed that you hadn’t received your tax package from a stock brokerage like Robinhood or Webull or something like that.
Or you remembered you sold some crypto last year and you had to figure out how to report that and get the information you need from the platform you used.
So you set your tax return aside for a few weeks or a month and a half or something and then when you have all your documents, you start working on it again in the software.
What if you changed bank accounts during that time for whatever reason? And what if you moved as well? People change banks and move every day.
So that’s kind of the double whammy: The tax software still has your old bank information from when you started your return and still has your old address from last year’s return.
And what’s going to happen? The IRS will attempt to deposit your refund into your old bank account; assuming that account is closed; the bank will reject it.
Then the IRS will issue a paper check. And if your address was correct on your tax return, it would send the refund to that address.
So you would be dealing with a paper check, which would generally take longer than a direct deposit.
And then it gets even more complicated if your address was wrong on your return.
So go back to your return and check those two things — your direct deposit information and your address information — because those are the two places where the IRS would be submitting your refund.
5. Your refund was seized.
Now, if you owe back taxes to the IRS — which is what my firm and I help people deal with every day — the IRS will apply your refund to any outstanding liabilities they have on the books for you.
That’s fairly obvious. But it’s not just tax debt that your tax refund can be seized for.
The Treasury Offset Program allows the Department of the Treasury’s Bureau of the Fiscal Service to reduce or entirely take your refund for:
- Past-due child support
- Federal non-tax debts
- State income tax debts
- Fraudulent unemployment compensation debts
Now, you should get a notice in the mail informing you of any refund offsets, so hopefully you won’t be caught off guard if this happens.
But when this does happen, assuming you have some refund left after the offset, it’s typical for the refund to be delayed.
6. You are a victim of identity theft.
So for most of us, most of our most sensitive data is online. We live in an online world; even our money for most practical purposes, unless you do everything in cash, it’s numbers on a screen and stored in some bank’s records.
And if someone has access to your Social Security number, they could theoretically file a tax return on your behalf or do other shady things, both taxwise and non-taxwise, in your name.
To combat this, the IRS sends what are called Identity Protection PINS (IP PINs) to individuals that it believes are a victim of tax-related identity theft.
These PINs are renewed annually, and the IRS sends recipients a CP01A Notice at the beginning of every year to inform them of their new PIN.
So this is less likely than the other items on this list, but nevertheless, being a victim of identity theft is one reason why your tax refund might be delayed.
7. The IRS is just slow.
It shouldn’t be a shock to you to know that the IRS is understaffed.
If you go to jobs.irs.gov/careers, you can see that there are a ton of positions available.
So it’s quite possible that your refund is delayed through no fault of your own but simply because the IRS is just slow.
What To Do If Your IRS Refund Is Delayed
If your refund is delayed, here are some steps you can take.
1. Check the IRS Where’s My Refund tool.
The IRS Where’s My Refund tool may have further instructions for you such as to contact the IRS because they might want, perhaps, some additional information before they complete the processing of your return.
To use the tool, you should have handy your:
- Social Security number
- Filing status as shown on your tax return
- Refund amount as shown on your tax return
2. Double check your tax return, particularly your direct deposit information.
Another thing you’d want to do is check your direct deposit information on your tax return as well as other basic information like your mailing address and Social Security number as well as Social Security numbers for your spouse and your dependents because if one of those numbers is off, that could cause a delay.
If you do notice a mistake, you can try to call the IRS although it’s been pretty tough to get through lately or you can just wait it out because chances are the IRS will figure out the mistake and send you a notice in the mail, but unfortunately your refund will be delayed.
3. Keep an eye on your mailbox, even if you are expecting a direct deposit.
Obviously if you put your direct deposit information on your tax return, you’re probably expecting your refund as a direct deposit (obviously).
But don’t ignore your mailbox. Bank deposits get rejected every day and sometimes for bizarre reasons like the bank has a policy that your middle initial has to be included or something like that.
So if it’s been three weeks — that 21-day period — and you e-filed your return with direct deposit information and you still haven’t received your refund, it doesn’t hurt to keep an extra eye on your mailbox.
4. Request an expedited refund.
This last option is not a guarantee, but it is actually possible for you to request an expedited refund from the IRS if you’re facing a financial hardship as a result of not having that refund in your hands right now.
An example of a financial hardship is that you will not be able to buy medicine or pay your rent or other basic living expenses.
It’s not financial hardship in the IRS’s eyes that you really need your refund because you don’t want to miss out on post-Tax Day sales on televisions and clothes and other stuff.
In order to request an expedited refund with the IRS, you should call 1-800-829-1040 and tell them you are requesting an expedited refund due to hardship.
You should explain your hardship situation that the delayed refund is causing you and request that a manual refund be expedited to you.
The IRS will likely want you to submit to them documentation to prove the financial hardship you’re going through as a result of your delayed refund and possibly a copy of your tax return.
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.