Tax refunds typically arrive within days of when you file your individual tax return. One reason it may take longer: if you made a mistake calculating your recovery rebate credit.
Wondering where your tax refund is? In its Covid- operations update, the Internal Revenue Service has added an explanation for why in many cases it’s taking longer than the typical days to process tax refunds for individual taxpayers. We’re talking about tax returns filed for the tax year during the tax season that opened in February and runs through May .
May ? That’s right. individual tax returns are due on Monday, May 17 —instead of the typical April 15th due date. The delayed due date is because of the many ways the coronavirus pandemic has upended people’s lives and their tax pictures. Note: Quarterly estimated taxes for the tax year are still due on April 15th.
So why are refunds taking longer than usual? For one thing, the IRS is still wading through the backlog of prior year tax returns. As of March 2021, there were over six million individual tax returns received prior to the current year pipeline.
There are two other main reasons returns are stuck in the unprocessed pile. For taxpayers who used their income to figure the Earned Income Tax Credit and the Child Tax Credit, an IRS employee has to validate the return. The second reason is many returns are requiring a correction to the Recovery Rebate Credit amount claimed on the return.
Neither of these two cases requires the IRS to correspond with taxpayers, but the “special handling” means that it’s taking the IRS more than days to issue any related refund. If a correction is made on the return, the IRS will send an explanation letter.
The IRS has a whole Q&A page set up for questions related to Recovery Rebate Credit corrections after tax returns are filed. Taxpayers who were eligible but didn’t get the Round 1 or Round 2 stimulus payments from the March CARES Act and the year-end spending package could claim those payments on their tax return as a recovery rebate credit.
If you were eligible for the recovery rebate credit but didn’t claim it, you need to file an amended return. If you entered an incorrect amount for the credit on your return, you should NOT file an amended return, the IRS says. The IRS will calculate the correct amount, make the correction to your tax return, and continue processing it. Some of the reasons the IRS is changing credit amounts include: the taxpayer was claimed as a dependent on another taxpayer’s return, there was an issue with Social Security numbers or taxpayer identification numbers, a child exceeds the age limit, or your adjusted gross income was too high.
For the quickest refund, e-file your return and choose direct deposit. To check the status of your refund, use the IRS Where’s My Refund? tool.
