It’s hard to believe we’ve already reached everyone’s favorite time of year: tax filing season. Truthfully, as much as people love to complain about this period, the vast majority of taxpayers, over 70% based on recent IRS data, receive money from the IRS in the form of tax refund. Most refunds aren’t minuscule either. The average refund of nearly $2,800 is far from financial peanuts.
Financially-speaking, receiving a large tax refund isn’t ideal. Ultimately that’s your own money – that you’ve “loaned” to the government interest-free – coming back to you. Still, receiving a big check feels good.
Checking your refund’s status
Any time it comes to receiving money, now beats later. Understandably, then, those owed refunds find themselves wondering how soon they can expect that money. Fortunately, the IRS has a helpful tool at https://www.irs.gov/refunds for checking the status of your refund.
Using this website you can see when your return has been accepted and approved. You’re also given an estimate of when your refund will be sent. All you need is to enter your Social Security number, filing status and exact amount of your expected refund. If you filed electronically this information should be available within 24 hours; those who mailed their return need to wait four weeks.
New law may lead to longer return processing time
Starting this year, the IRS must follow a new law passed by Congress requiring them to hold refunds on certain tax returns to allow extra time to review these returns for potential fraud. In recent years, identity theft and tax fraud has been an issue. These new regulations are designed to help combat fraud, but may result in legitimate refunds taking longer than normal to process.
It does appear these new measures have been working, however. From 2015 to 2016, more than 50% fewer people reported stolen identities on federal returns. Keep that in mind if you have to wait a little longer to receive your refund; it seems to be helping reduce fraud and identity theft.
An early check of potential issues with your return
In addition to satisfying your curiosity about when you can buy that new plasma TV with your refund, this tool is also useful for checking the status of your return. Not too long ago, a client was curious about when she would receive her refund. We recommended she use the above tool to check. There was a note that her refund was being held until she resolved an issue with her return.
While the issue was relatively minor, the IRS had sent her a notification letter, but it was sent to an old address and she never received it. Had she not checked online, the issue would have gone unresolved as the IRS waited for her to respond to their letter. Instead, she was able to proactively reach out and get it resolved quickly.
Well, relatively quickly. Even with this helpful online tool, no one is going to mistake the ‘S’ in IRS for “speed.”
Mark Durrenberger, CFP®, ChFC®, EA is a Senior Advisor at BDF. Mark has been in the financial industry since 2010 and received both his Master’s and Bachelor’s degrees from Northwestern University.