Are you eagerly waiting for your federal income tax refund but constantly refreshing your bank account with no luck? Don’t worry; you’re not alone. Tracking the status of your refund can be confusing and frustrating. But fear not; we’ve got you covered. In this article, we’ll guide you through the steps to track your refund, so you can finally put your mind at ease and know exactly where your hard-earned money is.
How to File Your Income Tax Return
Many filers are anxious to receive their federal tax refund but need to know how to track the status. Tracking your return is quick and easy; you don’t have to file a second return in most cases. As long as you file your taxes correctly, you should be able to track your returns within 36 hours of e-filing or four weeks after paper filing.
There are a few different ways to file your individual income tax return. You can either hire a tax preparer, file electronically using software or an app, or fill out an IRS Form 1040 or 1040-SR by hand and mail it.
Keep backup records for returns from each tax season, as they can help with future filings and make it easier if you need to file an amended return. Examples of these records can include invoices, canceled checks, sales slips, paid bills, receipts, deposit slips, and more. Keeping these documents is crucial as they support the records on your return.
Common Causes of Delayed Income Tax Refunds
While you should receive your refund from the Internal Revenue Service in 21 days or less, you should track it regularly, especially if it has been longer than a few weeks. The fastest way to check your refund status is to use the Where’s My Refund? tool or download the IRS2Go App on your phone.
There can be several factors that cause delays, including:
- Errors or inaccuracies, such as the wrong social security number, ID number, or filing status
- Receiving a refund amount that is larger than average compared to prior years
- A mismatch between the information on your federal tax return and state tax return
- Submitting a paper tax return instead of an electronic one
- Using a form for the wrong tax year
- Claiming certain tax credits or deductions that require additional processing time
- Identity theft or fraud
- Delays in mailing or processing the tax return by the IRS
It’s important to remember that the process may also take longer during certain times of the year due to high volumes of tax returns being processed.
How To Receive Your Tax Refund Faster
Waiting for a tax refund can feel like an eternity, but did you know there are ways to speed up the process? Taking a few simple steps can help ensure your tax refund arrives quickly. In this section, we’ll share some expert tips on receiving your tax refund faster, so you can get your hands on your hard-earned cash in no time.
To reduce the number of potential mistakes and mathematical errors on your return, file electronically. Filing electronically can also bring up potential tax credits or deductions you didn’t know you could claim. File either with IRS Free File or another online tax software like Turbo Tax, and choose direct deposit to get your refund quickly and securely.
Mail Paper Returns to the Correct Address
The recommended method to file your tax return is electronically, as it is more efficient, accurate, and secure than filing a paper return. However, those who choose to submit their return through the mail should verify their correct address to ensure it arrives promptly and efficiently. To avoid delays, you can look on the Where to File Paper Returns page on the IRS website to confirm the address before you send it out.
Report All Taxable Income
Under-reporting your income can lead to penalties and interest. Most income is taxable, which includes interest received, unemployment income, money from digital assets, the service industry, and more. IRS Publication 525 explains the difference between taxable and nontaxable income.
Make a Copy of Your Tax Return
Taxpayers should keep a copy of their signed return and any schedules used to prepare the filing. Making copies of your return will help you with any math calculations if you need to file an amended return and can also be helpful for reference when processing future annual tax returns.
Taxpayers must keep their records on file for items of income, deductions, or credit listed on their return until the period of limitations for that return ends. Generally, this is three years from the date you filed your original return or two years from the date you paid the tax, whichever is later if you file a claim for credit or refund after you file your return.
Direct Deposit: The Fastest Way to Receive Your Refund
Direct deposit lets you transfer your tax refund electronically into your bank account for free. In addition to not costing anything, the service is easy and safe while also giving you the security that you will receive your funds automatically. With direct deposit, you don’t need to worry about your check getting stolen or lost in the mail.
How To Set Up Direct Deposit
Setting up direct deposit is relatively easy. If using an online tax company or software to file, you would choose direct deposit as your refund method. You will also need to enter your bank account information and routing numbers.
If you use a tax preparer/accountant to file, let them know that direct deposit is your preferred method. You can even choose direct deposit if you still file your taxes by paper.
Using Mobile Apps
Some mobile apps will let you choose direct deposit for tax refunds. Like e-filing, you will need your routing and account numbers to enter them on the tax return. The easiest way to do this is to confirm the numbers with your mobile app provider or your financial establishment of choice. It is important to note that you must have this information ready when filing, as the IRS cannot accept it once you file the return.
What Are the Benefits of Using Direct Deposit?
Here are some key benefits of using direct deposit to receive your tax refund:
- Faster access to your money: Direct deposit allows you to receive your tax refund in a few days rather than several weeks with a paper check.
- Convenient: With direct deposit, your refund goes directly into your bank account without the need to visit a bank or wait for a check to arrive in the mail.
- More secure: Direct deposit eliminates the risk of a paper check being lost, stolen, or damaged during mailing.
- Cost-effective: Using direct deposit is usually free, while cashing a check at a check-cashing store may result in fees.
- Environmentally friendly: Choosing direct deposit helps to reduce paper waste and protect the environment.
Another often overlooked benefit is that using direct deposit for your tax refund provides options. You can divide your refund into three different financial accounts, including checking, savings, and IRA. You even have the opportunity to purchase savings bonds with your refund. For those interested in divvying up your refund, use this form: Form 8888, Allocation of Refund (Including Savings Bond Purchases).
What to Do If You Haven’t Received Your Refund
Tax returns received in the current year will be processed depending on which refunds are due first. Tax returns where taxes are owed are processed last. However, if payment is received with the tax return, the payment gets deposited immediately to credit the taxpayer’s account.
As tax returns get processed, there may be delays if there is missing information, suspected identity theft, or fraud. The IRS will try to correct the information without contacting you, but they will send you a letter if they need more information.
IRS representatives can only check the refund status if it has been more than 21 days since you filed electronically, you mailed your return six weeks ago or longer, or if the Where’s My Refund? tool advises you to contact the IRS. Resolving these issues could take more than 120 days, depending on your response and response time.
Understanding Refund Status
When tracking the status of your tax refund, it’s essential to understand the various refund statuses used by the IRS to identify where your refund is in the process. Here are some typical refund statuses and a brief explanation of each:
- Received: This status indicates that the IRS has received your tax return and is being processed.
- Approved: Your refund has been processed, and the IRS has determined it is owed to you.
- Sent: Your refund has been transmitted via direct deposit or as a paper check.
- In Progress: This status can occur when your refund has been delayed for various reasons, such as errors on your return or because you have been selected for additional review by the IRS.
- Under Review: This status means that the IRS is conducting a more thorough review of your tax return and may require additional information or documentation before continuing the refund process.
While it can be frustrating to see that your refund is stuck in one of these statuses, understanding what each status means can help you prepare for and anticipate when to expect your refund.
What To Do if Your Refund Hasn’t Been Received
If you filed electronically and received confirmation that it was received, you only need to do something other than respond to any questions for additional information. Check the IRS website’s Where’s My Refund? page if you filed on paper over six months ago.
If the website can’t locate your return, you should resubmit an electronic tax return. The tax return should include an original signature and all documents submitted with the original return. Amended returns could take more than 20 weeks to process, but you should only file for a return once. After that, you should check the Where’s My Amended Return? for updated information.
Why Would a Refund Be Withheld?
Tax refunds are usually issued within 21 days if you file electronically. However, if you file using the paper form, it can be longer. The pandemic still has lingering effects on the IRS and may cause delays in getting your refund. Other delays may result from responding to taxpayer mail and processing incorrect tax returns.
Did You Know Real Estate Could Create a Tax Refund?
Owning a fractional share of rental property can generate a tax refund for taxpayers in several ways.
For instance, if a taxpayer owns a fractional share of a rental home or vacation rental, they can claim their share of any rental income or losses generated by the property on their tax return. This can help to reduce their tax liability or even generate a tax refund, depending on the amount of losses or income generated.
Additionally, they may be able to claim depreciation expenses, reducing their tax bill. However, it’s important to note that owning a fractional share of rental property also comes with certain risks and responsibilities. Finding the best real estate investment for you can be challenging if you try to figure everything out independently.
Investing through Arrived can minimize the unknowns and the hassle of finding and managing properties. Browse available investment homes today and see how your initial investment could grow over the next few years.