It’s tax season! Tax season opened on January 23, 2017, and according to the Internal Revenue Service (IRS), so far, so good.
Unfortunately, some taxpayers were caught off guard by a new rule that requires the IRS to hold tax refunds for taxpayers who claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit. You can find out more about those credits and the delay here.
As taxpayers eagerly await their tax refunds, the IRS has acknowledged that there are a number of “misunderstandings and speculation about refunds.” To help sort out the truth from the confusion, the IRS has issued a list of refund-related myths:
Myth 1: All Refunds Are Delayed
Taxpayers who are affected by the new law are those claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). Those taxpayers should expect the IRS to hold their entire refund check since the IRS isn’t allowed to release the part of the refund that is not associated with the EITC and ACTC. Taxpayers who do not claim the EITC or the ACTC are not affected by the new law. However, while more than 90% of federal tax refunds are issued in less than 21 days, some tax returns may require additional review and may take longer.
2: Calling the IRS or My Tax Professional Will Provide a Better Refund Date
According to IRS, many people mistakenly think that talking to the IRS or calling their tax professional is the best way to find out when they will get their refund. However, the best way to check the status of a refund is online through the “Where’s My Refund?” tool at IRS.gov or via the IRS2Go mobile app. The IRS updates the status of refunds once a day, usually overnight, so checking more than once a day will not produce new information. For an explanation of refund status announcements, check out this prior post.
Myth 3: Ordering a Tax Transcript a “Secret Way” to Get a Refund Date
Ordering a tax transcript will not help you find out exactly when you might get your refund. The information on a transcript does not necessarily reflect the amount or timing of a refund. While you can use a tax transcript to validate past income and tax filing status for mortgage, student, and small business loan applications and to help with tax preparation, you should use “Where’s My Refund?” to check the status of their refund. The codes that you’ll see on your tax transcripts do not offer additional information about when your refund will be issued.
Myth 4: “Where’s My Refund” Must be Wrong Because There’s No Deposit Date Yet
The “Where’s My Refund?” tool will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after February 15. Those taxpayers claiming EITC or ACTC will not see a refund date until then. The IRS, tax preparers and tax software will not have any additional information on refund dates.
Myth 5: Delayed Refunds, those Claiming EITC and/or ACTC, will be Delivered on February 15
Remember that the new law will not allow the IRS to release tax refunds until after February 15. That does not mean that refunds will be available on that date. In addition to normal processing times for banks, remember that President’s Day weekend may impact when you get your refund. The IRS cautions that delayed refunds may not start arriving in bank accounts or on debit cards until the week of February 27, assuming that there are no processing issues with your tax return and you choose direct deposit.
That’s it. There are no magic codes, keys or other tricks to getting your tax refund faster this tax season. The IRS encourages taxpayers who are expecting tax refunds to file as early as possible, using e-file and direct deposit.
