A refund from our federal government (or one of the 43 states with an income tax on work income) occurs when you have overpaid withholding or estimated tax.
Makes sense, right?
Time for some simple truth here.
There are 3 possible outcomes to a tax filing:
Refunds are pretty plentiful this year in our practice because of the Recovery Rebate Credit.
If you either did not get all of your stimulus in Spring 2020, or January 2021, you recover it (hence the name) in the form of a refundable credit when you file Form 1040 for 2020 in this current tax season.
Fun fact: stimulus payments were actually designated as refundable credits by the Treasury anyway; they were just issued before the tax season filing.
You may have had a new baby since your 2018 or 2019 filing, or…
(and this is good)
You may have made more than the threshold amount in one of those past years, and when you file 2020 for less that $75,000 single/$150,000 married AGI guess what?
So, let’s talk about refunds a little.
The IRS tells us that if you elect direct deposit, you may receive your refund within 3 weeks, in some cases faster.
That’s what I say to my clients that are expecting one.
Does anybody have the experience that it’s taking longer?
Possibly due to Round 3 Stimulus going out during tax season?
I haven’t had any client complaints (yet), but I suppose it’s possible.
I ask because I’m on a local community forum in Colorado Springs, my home town.
Someone asked about refunds being late, and the number of people saying they were waiting over a month surprised me.
I went to the source, the IRS website, and Topic No. 152 Refund Information addresses a few things.
First, they still stand by their assertion that 9 out of 10 refunds via direct deposit occur within 21 days.
They also tout their tech tools for checking the status of a refund.
You can go to Where’s My Refund (type that right into your search bar, it’ll pop right up) on your PC.
Or the Play Store/App Store on your phone, search for the IRS2Go app.
If you have direct deposit selected you can check it 24 hours after your e-file was accepted.
If you’re sitting around in Week 4 wondering what the heck is up I hope this helps.
Of course, this all assumes that your e-file was accepted, so if you’re not sure go look, or ask your tax person.
If you need help?
Click Schedule Time with Me on my website or Facebook page.