When you pay taxes, there’s a good chance you will receive something back from the government. Over 100 million taxpayers received tax refunds for their 2021 returns. While that’s no guarantee, it happens to many people. But some people receive their tax refund sooner than others. So, if you happen to receive a tax refund, how long would it take? Understanding how the Internal Revenue Service (IRS) processes tax refunds can give you an idea of what to expect. You will also learn a few strategies that can help with getting your tax refund sooner.
The IRS and Tax Refunds
The IRS offers many tax refunds because of the way filing taxes work. Many people overpay for their taxes or have too much of their money withheld from their W-2 payments. Overpaying is more common among self-employed workers, while tax withholding typically applies to employees. While consumers will be happy with any additional dollar that arrives in their bank account or via a paper check, this isn’t free money. Tax refunds are the money you rightfully deserve but end up receiving later than you should have. Still, it’s better than not getting a small refund from the IRS. You can use the money in any way you desire.
The Tax Refund Process
The tax refund process depends on how you file your taxes. You can get help from a professional, use online tax software, or mail a completed Form 1040 or 1040-SR. However, completing a form yourself and mailing it to the IRS is not recommended due to the risk of making an error on the tax form.
The refund process starts on the day your taxes get filed. The IRS looks at your income taxes and compares them with how much you paid in taxes. People who overpay will end up with refunds. The amount of time it takes for a refund to show up in your bank account or through another designated method depends on how you file your taxes. If you qualify for a refund, you can receive your payment through one of the following methods:
- Direct deposit cash payment — the fastest choice
- U.S. Savings bonds
- Debit card with the difference — can be a good idea if you do not have a bank account
- Paper check
- Contribution for one or several retirement accounts under your name
Factors That Can Affect How Long Your Tax Refund Takes
The way you file taxes impacts when you will receive funds, but there are other factors that impact how soon you will receive funds. Taxpayers who used tax credits like ACTC or EITC may experience a delay. That’s because many tax returns with these credits qualify for special handling. This process extends the timeframe for receiving a refund. Incomplete tax forms, fraudulent forms, or tax forms that have errors will also go into the special handling category. Regardless of how you file your taxes, it can take over four months to receive a tax refund if special handling is required.
How to Track and Check the Status of Your Tax Refund
Wondering how much you will receive and when the funds will go into your bank account? The IRS created an app that lets you know the status of your refund. You can download the IRS2Go app and browse through the interface to a section that lets you learn about your tax refund. A taxpayer will have to enter their Social Security Number, filing status, and the tax refund amount to receive an update. Don’t want to download another app on your smartphone? The IRS has a Where’s My Refund page that lets you fill in similar details to learn more about your tax refund.
You can track when the IRS receives your tax returns, accepts the refund, and sends it your way. You will then have to wait for the refund to show up in the way you specified (i.e., direct deposit, retirement account contribution, paper check, etc.).
When Can You Expect Your Tax Refund?
Your tax refund’s arrival time depends on how you filed your taxes and if your taxes require special handling. For example, it can take over four months to receive a refund if your taxes are a part of the IRS’s special handling. But what if your taxes aren’t part of that condition? Here are the timelines for receiving refunds:
- E-file: 1-3 weeks for a direct deposit or 1 month for a paper check that arrives in the mail.
- Paper file: 3 weeks for a direct deposit or 2 months for a paper check that arrives in the mail.
Can You Get Your Tax Refund Faster?
It’s possible to get a tax refund sooner than the average taxpayer. And for many people, that earlier payment can make a big difference. Receiving your refund sooner can help with emergency expenses or investment returns if you prefer to put the money to work in assets. Tax refunds are essentially money you let the IRS borrow without receiving interest, so it is a good idea to get it back as quickly as possible. These strategies will help.
If you set up a direct deposit to get your tax refund, online banking platforms like Current offer early access to direct deposits. This means that you will get your money from your tax refund up to 2 days sooner than with other traditional banks. Current also provides a high-yield savings account with a 4% APY and many features to manage your spending and money better. If you are ready to get your tax refund earlier, visit Current’s website to open an account or check all the mobile banking app offers.
File Early
Filing your taxes early means fewer taxpayers stand between you and your refund. Most people file their taxes near the deadline, which creates more delays for that group. Filing taxes earlier is like missing rush hour traffic. Getting a head start gives you a clearer road and path to a tax refund. Documenting your expenses at the end of the year and knowing which forms you need can help you feel your taxes earlier.
File Electronically
Filing your taxes electronically will help you get a refund quicker than filing paper tax forms. The electronic copy automatically goes to the IRS upon completion, while the paper copy has to get mailed first. You can get a paper check a month earlier if you submit an E-File instead of a paper file.
Prepare and Check Your Tax Data
An incomplete form or a single error will prolong the tax refund process. If you submit a perfect form without any errors, you will get your refund in the appropriate timeframe. However, any mistake can add a few months to the process because those tax returns require special handling.
Choose Direct Deposit
Direct deposit arrives much quicker than a paper check. The best-case scenario for a paper check is waiting an entire month. On the other hand, taxpayers who choose direct deposit won’t have to wait for over three weeks in most cases. You can even get your tax refund in one week if you file your taxes electronically and request direct deposit.
Choose an Account with an Expedited Tax Refund Transfer
Under some scenarios, you can get an expedited tax refund transfer. You can look for tax software that offers expedited tax refunds. It’s also possible to ask the IRS to expedite your tax refund. You can call the IRS at 1-800-829-1040 to make your request. The IRS will only consider your request for an expedited tax refund if a temporary backlog in processing is creating a delay. You will also have to demonstrate that you are experiencing a financial hardship for the IRS to manually process the refund faster.
