Another tax year is done (other than extensions) and once again the familiar story of American tax payers facing longer than expected delays in getting their refunds is playing out. Some of the reasons are a repeat of last year, but some new ones are emerging. With that in mind here are the top 5 reasons why your tax refund could be delayed this tax filing season:
1. Past Identity and fraud checks – Due to the ongoing cyber attacks (domestic and international) the level of identity checks continues to increase every year. Those with issues in the past will face even higher hurdles to prove their identity and will more likely than not face delays in getting their tax refunds. If this is you, then expect a long delay again this year.
2. Claiming the EITC or ACTC = Delayed Refund. This issue has been persisting for the last few years and the IRS has been mandated by law that it cannot release refund payments for returns claiming these two popular tax credits. At this stage, processing schedule estimates are predicting a late February/early March payment for refunds that include these credits.
3. You made obvious filing mistakes like missing names/SSN, incorrect bank account details or forgetting to sign your tax return. According to the IRS, one of the main things causing people to experience delays in getting their refunds is returns that are not accurately completed. The best way to address this is to resubmit an amended tax return entering the changes and explaining why you need to amend your original tax return. You don’t have to redo your entire return, either. Just show the necessary changes and adjust your tax liability accordingly. You usually do not need to file an amended return because you forgot to include tax forms such as W-2s or 1099 forms. The IRS normally will send a separate request asking for those documents.
4. Cuts to IRS staffing. I won’t get into the politics here, but staff cuts to the IRS over the last few years has meant that IRS processing times are delayed further, despite widely published processing guidelines. In fact, even if you e-file early, the IRS won’t start processing your tax return anytime soon.
5. Issues with your accountant or tax preparer – Most people get help filing their taxes, either from computer software or a tax professional. But you need to get someone trustworthy or else your return will be flagged . This mean making sure they are properly registered and have a tax preparer tax identification number (PTIN) from the IRS. The IRS also has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications that shows preparers in your area who currently hold professional credentials recognized by the IRS, or who hold an Annual Filing Season Program Record of Completion. Also look for advanced credentials like a CPA or enrolled agent status who can help with more complicated tax matters and get you answers in a more timely fashion.
Which ones apply to you? If not in the list above or you just want a place to vent, leave a comment below.