You’ve done all the right things: kept your donation receipts, gathered your tax forms, and entered all of your income and deductions into the tax software. But where is your refund?
There is nothing worse than having to wait for your income tax refund. As of December 2021, the IRS has announced that they are backlogged on over 6 Million tax returns. Meaning, if you mailed in your tax return ON TIME to the IRS back in April, you could still be waiting on your refund almost one year later.
Here are a few ways to get your tax refund back faster:
File early
There are two important reasons to file your tax returns early. The first reason is pretty obvious: the sooner you file, the sooner your return will get processed by the IRS and your refund issued. The second has to do with identity theft. When this happens, it can take months to get things sorted out with the IRS.
Tax refund theft is on the rise. This happens when someone steals your personal information and fraudulently files a tax return on your behalf in an attempt to receive your refund. One strategy to avoid this is to file your tax returns early. Another is to apply for an Identity Protection Pin (IP PIN) with the IRS.
e-File your returns
Are you still using a flip phone or fax machine? I didn’t think so! You shouldn’t be mailing in your tax returns either. Whether you’re using a tax professional, software like TurboTax, or using the IRS’ Free File service, it is far more efficient to file your taxes electronically online.
On average, it takes the IRS six to eight weeks to process tax returns filed by mail. However, with Coronavirus, the IRS is backlogged over 6-8 months. By eFiling your tax returns, you can usually expect a tax refund within 21 days.
Direct deposit your refund
If you’ve completed your taxes early and filed them electronically, you’re off to a good start. However, another roadblock could be how your refund will actually be issued to you. There are typically three options: check mailed to you, applied to your tax account for next year, or direct deposit to your bank account.
For some taxpayers, it might make sense for them to apply their tax refund to next year’s tax liability. With this option, the IRS is not actually sending you your refund.
If you don’t enter your bank account information onto your tax return, the IRS will default to mailing you a physical check. The risk here is that your refund could potentially be delayed due to slow processing times at the IRS or U.S. Postal Service.
The third and best option is to request a direct deposit. To do this, you will enter your bank account number and routing number onto your tax return. This is by far the quickest way to receive your refund.
Request an expedited refund
Depending on your situation, waiting might not be an option for you. If you are facing a financial hardship (can’t buy medicine, can’t pay mortgage or rent and received an eviction notice, can’t pay utilities and got a shutoff notice, etc.) and you need your refund sooner, the IRS may be able to expedite the refund. You will need to contact the IRS and explain your hardship situation.
To request an expedited refund, you can call the IRS at 800-829-1040 to explain your hardship situation and request a manual refund expedited to you. The IRS will likely request documentation of your financial hardship such as copies of shutoff notices, eviction or foreclosure notices, etc., as well as other supporting information like a copy of your tax return with the refund claim. You should respond promptly to the IRS’ request to help get your refund processed.
Making the right moves is essential to getting your income tax refund back faster. If you would like to work with a financial planner to walk you through your options, I would love to help you!
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Disclaimer: This blog is for informational purposes only, and should not be considered advice or recommendations. All opinions expressed herein are solely those of Amaral Financial Planning, LLC, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made to another parties’ informational accuracy or completeness. You should consult your financial advisor, tax professional or legal counsel prior to implementation.