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6 things that could delay your tax refund

March 23, 2022

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One of the big selling points of taking your taxes electronic is that the Internal Revenue Service’s turnaround is quicker. The tax agency has long touted that when taxpayers e-file and have their refunds direct deposited, the tax cash usually shows up within 21 days.

Usually.

The only thing certain about taxes is that they’ll find a way to frustrate you. That’s the case when e-filed refunds take longer.

Here are six reasons, from the IRS and tax community, as to why your refund may be delayed.

1. Math errors: Yes, taxes are complicated. That’s why most of us use tax preparation software or hire a tax pro, who also used tax software to prepare and e-file our 1040s.

But all of us are only human. And math mistakes are the most common filing errors. Transposing numbers to misplacing a decimal point can really screw up your return and the IRS’ processing of it, especially when the tax collector is able to double check the figures against the copies of your tax statements it received.

Software is only as good as the information entered. So double check your 1040 carefully before sending.

The IRS usually corrects math errors and sends you a notice of the changes. But that slows down the issuance of your refund, and depending on the size of the math mistake, affect the size of it.

2. Incorrect or missing information: In addition to math errors, other entry mistakes will slow down your 1040’s processing. Errors of omission can create a big refund roadblock.

This includes your — and your family members’ — tax identification numbers. A wrong Social Security number for you, your spouse, and any dependents will cause IRS processing to come to a grinding halt during the initial electronic review of your return. Then you have to wait for the mismatched digits to be reviewed by an agent.

Be careful, too, about the numerals you enter for direct deposit of your refund. An errant bank account or routing number could send your refund into someone’s account, into banking limbo, or back to the U.S. Treasury.

3. Unreported income: Remember those tax statements mentioned in #1? If you overlooked one of them and didn’t include the income on your return, the IRS will stop processing it to ask you about it.

This generally isn’t a problem when all your income is from salary or wages and you (and the IRS) get your annual W-2. But if you get any of the various 1099 forms, it’s sometime easy to miss one. When that happens, you have to deal with the IRS to reconcile the discrepancy.

That’s become more of an issue during the COVID-19 pandemic, as folks facing loss of hours or layoffs turned to gig work. So review all your 1099s, make sure you got all that were required to be issued in connection with your contract work, that the amounts are correct, and then include it on your 1040.

4. Certain tax credit claims: Tax credits are a great way to cut your tax liability and potentially get a larger refund. They reduce the amount you owe dollar-for-dollar. Some can even produce a refund if they are more than your tax bill.

But some credits also are on the IRS radar. The tax agency already has to hold refunds of early filers until mid-February when the associated returns include Earned Income Tax Credit (EITC) or Additional Child Tax Credit claims. Even after that time frame, the agency still looks more closely at these filings. The credits are complicated and honest mistakes are common. So is some associated fraud.

Much of the confusion here is, obviously, associated with dependents. Sometimes divorced spouses each claim the same child on their returns. Other times a child has earnings of his or her own and are filing their own returns. Refunds are stopped in these cases while the overlapping dependency issues are figured out, meaning someone will have to file an amended return and/or fight with an ex.

This year’s there’s an added dependent and tax credit element. With the issuance of half of the Child Tax Credit as monthly payments in 2021, taxpayers must reconcile that amount in order to claim the remaining balance of the credit they’re due. The same is true is you didn’t get any or a full economic impact payment last year and are claiming the Recovery Rebate Credit on your 1040.

5. Identity theft indications: The IRS has made major strides in combatting tax identity theft and related fraudulent refunds. But it has come at the expense of some refund-anticipating legitimate taxpayers.

IRS security filters could ensnare your return, with the agency then putting a hold on the refund until it is sure your identity hasn’t been stolen. In these cases, instead of your refund you’ll get Letter 5071C from the IRS, asking you to verify your information before your refund can be released. You can guard against this unwanted eventuality by applying for special IRS ID number that you use to file your return.

Several states also have their own tax identity theft protocols in place. If you’ve been waiting for a refund at that government level, check with your state’s revenue office or tax commissioner.

6. Unpaid debts or taxes: Sometimes others get a cut of your refund before you. This is she case where you’re not up to date on government payments. The obvious unpaid debt is any taxes, federal and state, you owe. Before you get a refund, the relevant tax collector will take his due amount from it.

Past-due child support amounts also is a common tax refund offset.

Unpaid federal student’ loan amounts also can cut into your refund, but the one slim coronavirus tax silver lining is that the government has paused collection activities here.

If you still owe after your refund has been offset, you’ll have to arrange to pay it.

These are among the most common reasons why tax refunds are slow to arrive. While they’re annoying, at least you know there is, in most cases, a way to fix the problem and get your refund, or what’s left of it, on its way to you.

And when you know your tax cash is being issued, you can track its arrival by using the IRS’ online Where’s My Refund? tool.

You also might find these items of interest:

 

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It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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