Taxpayer asks:

How can I update my direct deposit information with the IRS? I filed my 2019 individual return through a tax preparer & my direct deposit went to a joint account with my now ex-wife that was closed recently. All of the scenarios online do not apply to my situation, so hoping you can help point me in the right direction.

Taxgirl says:

So, typically, the best way to change your direct deposit information with the Internal Revenue Service (IRS) is to put your new information directly on your tax return. Be sure to double check your account and routing numbers before signing and submitting.

If you make a mistake and incorrectly enter an account or routing number and the bank accepts the deposit, you have to work directly with the bank to resolve the situation. Ditto if you requested a Refund Anticipation Loan (RAL) or Refund Anticipation Check (RAC) through your preparer or preparation software, and your tax refund was deposited into the preparer’s bank account. If funds aren’t available or the bank refuses to return the funds, the IRS can’t make the bank do anything: in that event, it becomes a civil matter between you and the bank and/or the owner of the account that has the money (that’s a long way of saying you may have to sue).

If you’ve filed but the return hasn’t posted to the IRS, you can ask the IRS to stop the direct deposit. Call the IRS toll-free at 1.800.829.1040, M – F, 7 a.m. – 7 p.m.

But in a case like this – where you’ve already filed and you think your refund has already bounced from the closed account – that’s not possible. Typically, if the account is already closed, the bank will return the funds to the IRS. When that happens, the IRS will send a paper refund check to your last known address on file. Hopefully that’s what happens here. Good luck!

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Looking for your interest? The Internal Revenue Service (IRS) will begin sending interest payments to individual taxpayers who timely filed their 2019 federal income tax returns and are due refunds. The IRS pegs that number at about 13.9 million taxpayers.

In June, the IRS announced that if you were entitled to a 2019 tax refund, individual federal income tax refunds issued after April 15 would be paid with interest.

Now, the IRS says that the interest payments, which average about $18, will be made to individual taxpayers who filed a 2019 return by the July 15 deadline and either received a refund in the past three months or will receive a refund. Most interest payments will be issued separately from tax refunds.

In most cases, taxpayers who received their tax refund by direct deposit will have their interest payment direct deposited in the same account. About 12 million of these payments will be direct deposited.

If you don’t receive your interest by direct deposit, you will receive a check. The checks will be notated “INT Amount,” which will identify it as a refund interest payment.

And as I noted in June, these interest payments are taxable. It’s just like any other interest you receive: you must report it on your 2020 federal income tax return that you’ll file in 2021. To help you sort it out, in January 2021, the IRS will send you Form 1099-INT if you receive interest totaling at least $10.

But don’t get too comfortable since this isn’t the norm. Usually, the IRS isn’t required to add interest to refunds on timely-filed refund claims unless they are issued more than 45 days after the return due date. But the deadline was pushed off this year due to the COVID pandemic. Specifically, on March 13, 2020, the President of the United States issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. In other words, the entire country has been declared a disaster area. Where a disaster-related postponement exists, the IRS is required to pay interest as of the original April 15 filing deadline, as long as an individual files a 2019 federal income tax return by the new deadline (in this case, July 15, 2020). 

The interest provision only applies to individual income tax filers (sorry, businesses).

So how much is coming your way? Interest is paid at the legally prescribed rate that is adjusted quarterly. The rate for the second quarter ending June 30 was 5%, compounded daily. Effective July 1, the rate for the third quarter dropped to 3%, compounded daily. If your payment period spans quarters, a blended rate applies, consisting of the number of days falling in each calendar quarter. It’s not awesome, but better than what many banks are paying.

If you were entitled to a 2019 tax refund, you may be in store for some good news: individual federal income tax refunds issued after April 15 will be paid with interest.

The Internal Revenue Service (IRS) has announced that individuals who file their 2019 tax returns before the July 15 deadline will receive interest for the period from April 15 until the refund issue date. That’s true even though the tax-filing deadline has been extended to July 15. 

You may have to re-read that paragraph because the whole thing is definitely a bit confusing.

Ordinarily, a taxpayer who timely files a return on or before the due date wouldn’t get paid interest on a refund unless the IRS waited more than 45 days from the due date or the date you file your return – whichever comes later – to issue a refund. But, this year has been anything but ordinary. So, for 2020, the IRS opted to refer to the original due date (April 15) and not the revised filing date (July 15) for all taxpayers who timely file. 

Here’s a quick example. Let’s say you filed on April 1, and the IRS didn’t issue your refund until April 20. Usually, that means that you’re not entitled to interest. But for 2020, you are, but only for the portion beginning on April 15 (so, April 15 through April 20).

But what if you – like many other taxpayers – filed closer to the deadline? Let’s say you filed on July 1, and the IRS issued your refund on July 20. You’ll still receive interest for the period beginning April 15 (so, April 15 through July 20).

If that sounds like you, but you didn’t receive your interest payment yet, don’t call the IRS. Interest payments may be received separately from your refund. And yes, any interest earned is taxable.

You won’t strike it rich, but it’s definitely better than nothing. The interest rate for the second quarter, ending on June 30, 2020, is 5% per year, compounded daily. The interest rate for the third quarter, ending September 30, 2020, is 3% per year, compounded daily.

You can read the full IRS statement here.

It has long been the case that if you owe money, your federal income tax refund can be seized to satisfy your debt. Examples of federal debts that might trigger offsets include federal income tax delinquencies and student loan defaults. States can ask the Internal Revenue Service (IRS) to intercept, or offset, federal tax refunds for state tax obligations or money owed to state agencies: this includes the state’s child support enforcement office’s authority to collect on child support arrears.

In the Food, Conservation, and Energy Act of 2008, the government gave itself the right to chase taxpayers for old debts indefinitely. And the easiest way to do it is through an offset. It’s referred to as “offset” since the seizures are part of the Treasury Offset Program (TOP); the program is administered by Financial Management Service, a branch of the U.S. Department of Treasury.

How does an offset typically work?

  1. If you owe money to a government agency, the agency is supposed to give you notice and allow you to resolve or dispute your debt. If you don’t reach a resolution, the agency can send the information about your debt to TOP. With respect to child support, individual state child support agencies submit your info, including the amount of past-due support through the Office of Child Support Enforcement (OCSE) to Treasury. You will then receive a Pre-Offset Notice that shows the amount of past-due support you owe, and information about how to contest the debt amount.
  2. Your name and the amount owed is input into the TOP database.
  3. If you are entitled to funds from the federal government (like a tax refund check), TOP searches the database.
  4. If your name pops up, your payment is offset by all or part of the amount you owe to pay your debt. The actual amount that Treasury deducts from your tax refund may differ from the amount on the Pre-Offset Notice: the state updates the debt amount regularly, but may not issue a new notice each time the debt amount changes. 
  5. After the offset, Treasury will mail a Notice of Offset to you explaining that all or part of your federal tax refund has been intercepted because of the support debt.
  6. The remainder of the check after the offset, if any, is sent to you (the person who owed the debt).

So what happens to the money that was intercepted or offset? It does not automatically get delivered to the person who is owed the child support.This is a popular misconception and one that has confused folks with respect to the stimulus checks. When the refund (or stimulus check) is intercepted, it is not simply mailed or deposited to the person who is owed child support. What happens is that the state that submitted the case typically receives money from the offset within two to three weeks. The money is then disbursed to the proper recipient (like the custodial parent). But if the offset is from a jointly filed tax return, the state may hold the funds for up to six months before it’s distributed.

What else can be seized under the offset program? TOP can also authorize the seizure of your wages (including military pay), your retirement, contractor/vendor payments, travel advances and reimbursements, certain federal benefit payments including Social Security benefits (but not Supplemental Security Income), Railroad Retirement benefits (but not tier 2), and Black Lung part B benefits. TOP also has a catch-all that allows them to collect from federal payments that are otherwise not exempt by law or by an action of the Treasury.

How does this apply to my economic impact payment (EIP), or stimulus check? The CARES Act made clear that the only reason that a stimulus check might be offset was for past-due child support. Your stimulus check may not be seized for any other debt, including back taxes.

How much of my stimulus check can be seized? Your entire stimulus check can be offset, up to the amount of your child support debt.

What about if you’ve lost my job or have another financial hardship? There is no reduction or other exception available, even for economic hardship.

What if you file a joint tax return? Typically, if your share of your tax refund as shown on your joint return was, or is expected to be, applied against your spouse’s past-due federal debts (including student loans), state taxes, or support payments, you are considered to be an injured spouse. This typically happens when the tax ID number of the person responsible for the tax liability triggers an offset of the entire refund. If you are entitled to injured spouse (not to be confused with innocent spouse) relief, you may be able to get your share of the tax refund released to you.

Is it always an even split? Your share is determined by a formula: it’s not necessarily a 50/50 split. An allocation is made as if you and your spouse each filed a separate tax return instead of a joint tax return. That means each of you must allocate your own wages, self-employment income and expenses (and self-employment tax), and credits such as education credits to the extent possible on separate forms. Items that are commingled, such as interest earned in a joint bank account, would be divided equally. The IRS uses the allocation to determine which portion of the refund, if any, would be due to an injured spouse.

Does the same rule apply to stimulus checks? The same relief is available for those whose stimulus check is impacted by a spouse who owes child support debt. You can file Form 8379, Injured Spouse Allocation (downloads as a PDF), with the IRS.

I don’t agree with this: who can I call? If you have concerns about the status of a debt or an offset, you can call the TOP Call Center at 1.800.304.3107. Don’t call IRS since IRS can’t reverse an offset or give you information about the debt.

While TOP can answer some questions, they can’t make arrangements for you to pay off your debt, tell you when the obligation was alleged to have been incurred, or even tell you how much you owe. TOP can only give you the contact information for the federal or state agency attempting to collect the debt.

As COVID-19 continues to impact the United States, the federal government is taking action to ease the burden on taxpayers. Most recently, as part of the CARES Act, the Treasury Department is sending out stimulus checks to most (but not all) Americans. Those stimulus checks are starting to hit bank accounts now, which is offering relief for some taxpayers – and anxiety for others.

One question that I haven’t addressed in detail until now is what happens if your refund was tied to a refund anticipation loan (RAL), refund anticipation check (RAC), or similar product. In those events, refunds are not usually directed to your bank account, but rather to an account managed by a third party (like a lender or preparer). The question, of course, is how to make sure that money gets to you – as the taxpayer – and not to the third party.

My guess was that the Internal Revenue Service (IRS) would ignore those refund accounts for purposes of reaching taxpayers.

Today, the new National Taxpayer Advocate Erin M. Collins confirmed that to be the case. Writing in her NTA blog, she notes that, “When a taxpayer purchases a RAL or RAC, a virtual bank account is established solely for purposes of receiving the refund and facilitating the transaction. The account does not continue to exist, and therefore Economic Impact Payments delivered to virtual accounts by direct deposit would not reach the intended recipient.”

(You can read more about Erin Collins here.)

Worrisome, right? Fortunately, the IRS has been down this road before. As Collins points out, those tax returns have an electronic indicator. That means that the IRS can identify you and make sure that payments are not delivered to those virtual accounts used to file the return.

If the tax returns also transmitted your underlying bank account information of the taxpayer, the IRS may be able to direct deposit refunds into your regular bank account. If that’s not possible – and the IRS doesn’t have your information on file – they’ll send your check by mail.

If you haven’t filed a tax return in 2018 or 2019 – did not have to file – you can register for your stimulus payment with the IRS. If you did file a return, but the IRS doesn’t have your direct deposit info (because, say, you owed instead of got a refund), you can register for your stimulus payment with the IRS.

As I’ve previously reported, folks who rely on Social Security retirement or disability benefits and Railroad Retirement benefits who are not typically required to file a tax return will receive their payment directly to their bank account.  

If someone else claimed you on their tax return, you will not be eligible to receive a check.

If you don’t know the status of your check – or you think you’ve done something wrong – hang tight. The IRS is not answering calls right now, and correspondence is limited. The IRS does ask that you do not file a second return if you are still waiting for your return to be processed (that could slow you down even more).

Finally, keep in mind that the payment is NOT taxable and will not affect your 2020 refund. 

The tax filing season opens on January 27, 2020. If you’re looking for ways to keep on top of things, check out IRS2Go, the official mobile app of the Internal Revenue Service (IRS). With IRS2Go, you can check your refund status, make a payment, and find free tax preparation assistance.

Some of the features on IRS2Go include:

  • You can check your tax refund status. You’ll need your Social Security number, filing status, and the amount of your anticipated refund. You can check your tax refund status within 24 hours after the IRS indicates receipt of your e-filed return or about four weeks after you file a paper return. There’s no need to check multiple times in a day: records are only updated by IRS once per day, usually overnight.
  • If you’re looking for free in-person tax preparation services, you can use the app to find an IRS Volunteer Income Tax Assistance (VITA) and/or the Tax Counseling for the Elderly (TCE) site near you. Enter your zip code and select a mileage range. You’ll be given a range of options with distance, hours, dates, languages and appointment details (if required) for each. To find the location that works for you, just click on “directions” and the maps app on your phone will help you get where you need to go.
  • If you need to file your taxes, you can get free tax software on your phone. Access free tax software from your mobile device to prepare and file your taxes – and get your refund.
  • If you owe taxes, you can find mobile-friendly payment options like IRS Direct Pay on the app. You can also make a credit or debit card payment through an approved payment processor.
  • IRS2Go can also generate login security codes for certain online services: you can get the codes through IRS2Go instead of through text messages. For more information about IRS online services, visit the Secure Access page on the IRS website.
  • You can also connect with the IRS on social media with a few clicks in the app. The IRS has social media accounts on Twitter, LinkedIn, Instagram, and YouTube.

IRS2Go is available for free from the Apple store (iPhone and iPad), the Google store, or from Amazon in both English and Spanish.

It’s a good idea to mull over other strategies before applying for a tax Refund Anticipation Loan (RAL). Just make sure they’re appropriate alternatives. Here are a few to consider:

1. Adjust your withholding. If you’re getting a big tax refund, that can mean that you’re having too much money withheld from your paycheck. You might do better to take a little bit out as you go by adjusting your withholding rather than waiting for a lump sum at the end. If you’re not sure where to start, grab a copy of your last tax return and your most recent pay stub and consider making some changes to your form W-4.

re2. Consider borrowing from another source not tied to your tax refund. The Tax Cuts and Jobs Act (TCJA) limits your ability to deduct the interest if you refinance your home, but there may still be a financial (non-tax) benefit to borrowing against your home. You may also qualify for a short-term loan from your bank or another lender that you could pay back with your tax refund without shelling out extra fees. Depending on the numbers, this could work out in your favor.

3. Open a savings account. Taxpayers often treat refund checks like forced savings accounts. If that’s the case, consider adjusting your withholding (see again #1) and open a savings account. If you’re not certain whether you’d qualify, ask around. Look for banks and credit unions that offer savings account with a low minimum balance. With direct deposit, you can route funds directly from your paycheck to your savings account: if it’s not in your hands, you may not be as tempted to spend it. Figuring the amount to save is easy. Look at your last few refund checks. Take the average – let’s use $1,500 as an example – and divide it by the frequency of your pay (if you’re paid weekly, that would be 52). In our example, that works out to $28.85 per week: that’s the amount to sock away each paycheck to save the same amount as you would have received as a tax refund. Bonus? You’ll earn interest (remember: the IRS isn’t giving you any).

4. Don’t cheat yourself out of deductions and credits. In the rush to get a tax refund, many taxpayers speed through their returns or rely on unskilled or unsavory tax preparers. Don’t underestimate the value of using the services of a competent tax professional who might be able to make recommendations and find deductions and credits that you might be missing. Spending the time to find a qualified tax preparer – especially one without an incentive to sell you extra services – may yield more tax savings in the long run.

Tax season opens Monday, January 27, 2020. The beginning of tax season can be a busy and anxious time for taxpayers – especially those who are waiting for tax refunds. Sometimes, taxpayers who are waiting for refunds turn to refund anticipation loans (RALs). Here’s what you should know about how they work and why you might not qualify for one.

An RAL is a loan that is offered by some tax preparers to taxpayers who are expecting a tax refund. The word loan is important: an RAL must be repaid.

Since an RAL is a loan, it is controlled by contract. You make an agreement with the lender (typically, a bank) to receive an advance based on your anticipated tax refund in exchange for a promise to repay the loan. The appeal of an RAL is that you usually receive cash quickly even if your tax refund won’t be paid out for a few weeks.

Even though tax season opens on Monday, you might not be eligible to receive your tax refund right away. That’s because the law requires the Internal Revenue Service (IRS) to wait until mid-February to issue refunds to taxpayers who claim the earned-income tax credit (EITC) or the additional child tax credit (ACTC). In addition to normal processing times for banks, factoring in weekends and the President’s Day holiday, the earliest EITC and ACTC-related refunds are expected to be available this year on February 28, 2020; that’s assuming direct deposit and no other issues. February 28, 2020, is the last weekday of February; it’s worth noting that the recording on the IRS phone line says to expect those EITC and ACTC refunds beginning the first week of March 2020.

(You can see my predictions about when you might expect your tax refund in 2020 here.)

The IRS is not directly involved in the RAL process. The IRS does not provide information to lenders and does not guarantee tax refund amounts to taxpayers. As a result, each year, I get a slew of questions about RALs. Here’s a quick rundown of some of the most common, together with my answers:

Q. If I was denied an RAL, does that mean I won’t get my tax refund?

A. No. The RAL application should be separate from the preparation of your tax return even if they are coordinated or completed at the same location.

Your eligibility for a tax refund is not be affected by being turned down for the RAL: your tax refund is still payable to you even if you were not advanced any money from the lender. That said, you may still be on the hook for loan application fees, credit check fees, and “junk” fees. This is one of the reasons you need to be cautious when seeking out an RAL: some providers make their money mainly from these fees and have an incentive to encourage you to apply for RALs that they do not have any intention of giving you.

Q. Why would I be turned down for an RAL?

There are a few reasons why you might be turned down for an RAL. The most common reason tends to be that the lender decides that you aren’t a good risk. Remember, an RAL must be repaid even if you receive a smaller tax refund than you anticipated. That means that you have to hope that your tax refund is large enough after you take out interest rates and fees – as well as any tax prep fees – to pay off the loan, or you’ll have to dip into your pocket to pay the overage.

Additionally, tax law changes and offsets (where the government dings your refund for money that you owe, such as child support or student loans) may affect your bottom line. The IRS no longer provides tax preparers, banks, or lenders with a “debt indicator” which tips off the lender in advance whether any part of your refund is earmarked for offset. That makes it more difficult for the lender to know what your bottom line might be and it also makes it more likely that they’re look at other criteria, like your credit history or salary, to determine whether to issue you a loan.

For more information on why you might have been turned down for an RAL, click here.

Q. My refund anticipation loan says your application has been received but has not been accepted at this time. What does that mean?

A. Since an RAL is a loan, it is subject to whatever due diligence the lender requires. For some lenders, that could be a quick credit check. For others, it may be a more involved process, especially if the amounts involved are significant. If it’s been more than a few days, there may be a question or a problem with your application. I would ask the lender (or tax preparer who offered the loan) for an update.

Q. I was turned down for an RAL, but now my tax preparer won’t give me my tax papers. What can I do? 

A. It’s not clear from the question whether you’re referring to your tax information forms (like your W-2 and 1099) or a copy of your tax return. In either case, your papers should be returned to you; the only difference is the timing. It’s possible that your tax preparer assembles returns and prepares copies of tax returns to send out on a schedule and just hasn’t gotten around to sending yours just yet. If that’s the case, give him or her a little time and follow-up. However, you are entitled to the immediate return of your information forms if the tax preparer didn’t prepare the return; I would politely but firmly request that those be returned. For more on dealing with an uncooperative preparer, click here.

All of that said, I fear that the bit that’s missing in your question has to do with payment. Reading between the lines, I’m guessing that there were fees tied to the RAL that you don’t feel you have to pay since you were turned down for the loan. I’m also guessing that the preparer is refusing to release the forms due because he or she wants to be paid. Neither one of these positions is acceptable. You need to pay any reasonable fees related to the RAL, even if the loan wasn’t granted, and your tax preparer needs to return your paperwork.

Q. So if I’m denied an RAL at H&R Block but accepted by somewhere else, where will my refund go when released?

A. It depends on where you are in the process. If you were denied an RAL a tax preparer but allowed them to prepare your tax return anyway, your tax refund should be delivered according to the regular IRS schedule. If you didn’t allow the tax preparer to prepare your tax return, and you signed a contract with a second tax preparer in conjunction with your RAL, then the refund will be delivered according to the terms of that agreement.

However, if you filed with one tax preparer like H&R Block and then filed again with another preparer who gave you an RAL based on that tax return, you have a problem. You should receive a tax refund for the first return, but the second return will likely be bounced. You’ll be responsible for paying back the loan at the second preparer, plus any related loan and prep fees. This is why it’s so important to understand the terms of the RAL application and preparation process before you begin. Be sure to ask in advance about fees, timing and what happens if you’re turned down.

Q. I filed my taxes with a tax preparer, but I do not have my tax refund yet. I checked my bank account, and it shows the fee from RAL, but I don’t know when I will get my refund. The tax preparer says he can’t help me. What can I do?

A. I’m assuming that you already have the RAL in hand, and you’re looking to repay the loan, but haven’t yet received your tax refund. If so, your tax preparer is right to say that he can’t help you since he has no more information about the payment of your tax refund than you do. Try checking the “Where’s My Refund?” tool on the IRS website, but remember that the “Where’s My Refund?” tool will only update your actual tax refund status and not the status of your RAL.

Q. I owe child support. Can I still get an RAL?

A. Maybe. Remember that RALs are typically based on credit-worthiness, so that’s going to play a factor. If your child support is the subject of a lien or other public record, it may show up on a credit report which would affect whether you would be eligible for an RAL. The lender typically won’t have notice of any offset (like those from student loans or child support) if you don’t speak up. But here’s the tricky part. Let’s say you get the RAL for your anticipated tax refund without figuring in the child support arrears, but it’s likely that your tax refund could still be offset. You’ll have to repay the entire loan even if your refund check is offset for child support; that could set you up for more significant financial problems down the road.

Q. Instead of taking an RAL, I filed my taxes early and got a refund. Now, I need to file an amended return. Will I get in trouble?

A. I get this question every year. Some taxpayers lie about their tax situation to get a tax refund early with the idea that they will simply file an amended return and fix their “mistake” later. This is not a good idea. Remember that you sign your tax return under penalty of perjury so if you willfully file a false return, you could get into trouble. But even if you don’t get into trouble, you may have to pay an additional fee to file your amended tax return. Most importantly, this scheme could open you up to extra scrutiny from the IRS, especially if you do it every year.

(If you have a tax question, here’s how to ask me.)

Tax season officially opens on January 27, 2020, and that means that many taxpayers are anxiously waiting to file in anticipation of a tax refund. But not all taxpayers are eligible to receive a tax refund right away: the law requires the Internal Revenue Service (IRS) to hold refunds tied to the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until at least February 15. Factoring in weekends and the President’s Day holiday, the earliest EITC/ACTC related tax refunds could be available in taxpayer bank accounts or on debit cards beginning February 28, 2020. That’s the last weekday of February; it’s worth noting that the recording on the IRS phone line says to expect those EITC and ACTC refunds beginning just after, during the first week of March 2020.

Some taxpayers use a Refund Anticipation Loan (RAL) to bridge the gap between the open of tax season and the time they might receive a refund. But not all efforts to get an RAL are successful. Sometimes, you’ll get turned down even if you think you’ve done everything right and even if you’ve had no problems in prior years. If you’ve been turned down for a tax refund-related loan, it might have been for one of these reasons:

1. You have bad credit. Remember that an RAL is a loan. You have to repay the entire amount of the loan even if you receive a smaller tax refund than you anticipated and even if you don’t receive any tax refund at all. That means that your tax refund must be large enough after you take out interest rates and fees, as well as any tax prep fees, to pay off the loan. All kinds of things could reduce the amount you receive, including tax law changes and offsets (more on those in a moment). The IRS no longer provides a “debt indicator” which advises the lender in advance whether any part of your refund is earmarked for offset. That makes it more challenging to know what your bottom line might be, and it also makes it more likely that the lender could rely on other criteria, like a credit check.

2. You’re maxed out. Even if you’re not delinquent on your credit cards or other obligations, a lack of credit can still result in a denial. If your credit cards and other loans are maxed out, a lender may not feel comfortable extending additional credit. If you’re not sure what your credit looks like, now is an excellent time to check. By law, you’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. You can order yours online from or call 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity.

3. You don’t have the right documents. Banks, employers, and others generally have until January 31 to get your tax forms to you (you can check specific due dates here), so it can be tempting to show up at your tax preparer’s office with your last paycheck in hand – and nothing else. However, the IRS explicitly bars tax preparers from e-filing your tax returns without receipt of forms W-2 (as well as forms W-2G and 1099-R, if applicable). If your tax preparer can’t put together your return, they may not be able to justify offering you a loan.

4. You made too much money. I know, you’re scratching your head on this one, but hear me out. Most of the big-dollar tax refund checks are related to refundable tax credits like the EITC and the ACTC. Those credits are generally restricted by a “completed phaseout amount” which is the amount of income at or above which no credit is allowed. If you make too much money, you won’t qualify for the tax credits. Your tax preparer knows this, and if your income won’t support those credits, it’s likely that your tax refund could be too small to be worth offering you a loan (remember that you have to account for fees, including tax prep, in the total). 

5. You didn’t make enough money. The crucial part of “earned income tax credit” is “earned income.” The amount of the credit is based on earned income – but not unearned income – which means that taxpayers who rely on dividends and interest don’t qualify, only those who work for a living. If you don’t make enough money, your ability to claim certain tax breaks, like refundable credits, could be limited. Again, your tax preparer knows this, and a lack of earned income could result in a denial.

6. You’re subject to offset. It has long been the case that if you owe money, your federal income tax refund can be seized to satisfy your debt. That’s referred to as “offset” since the seizures are part of the Treasury Offset Program (TOP). Examples of federal obligations that might trigger offsets include federal income tax delinquencies and student loan defaults. States can also ask IRS to intercept, or offset, federal tax refunds for state tax debts or money owed to state agencies: this includes child support arrears. This is where those debt indicators used to matter, but even if the absence of a debt indicator, some of the triggers for offset can be discovered using other methods. A credit check, for example, might reveal a student loan delinquency or default, and some municipalities publish notice of parents who are behind on child support payments. Being subject to offset can make you a risk to the lender, and they may deny you on that basis.

7. Your personal or financial circumstances have changed. More than tax laws can influence the amount of your tax return: Your personal or financial circumstances can change, too. If you got married or divorced, had a baby, sent a child off to college, got or lost a job, or even moved to a different state, your tax picture can change. Your tax preparer knows this, too. If you always get the same amount, but your tax picture will look a little different this year because of a change in circumstances, your tax preparer may determine that your refund won’t support issuing you a loan.

8. You’re the victim of identity theft. There may be another reason that you might fail a credit check, even if you have good credit: identity theft. If your identity has been stolen and used to file a tax return, it will interfere with your ability to file a return and claim a tax refund (and therefore, a loan). Even if your identity hasn’t been used by another person to file a tax return, if you’ve been the victim of a data breach and decided to take advantage of a credit freeze, the freeze affects access to your credit information. (See Zack Friedman’s previous article here.)

9. The lending or tax prep company is dishonest. Please do not misunderstand/misread/misrepresent my statement. While I am generally not a fan of RALs, I do recognize that many taxpayers rely on them. And it makes sense that when there’s demand, there are going to be companies that step in to fill that need. And many of those companies are honest companies, but not all of them are: some companies are dishonest and intend to deny your loan from the beginning but don’t tell you because they want the related tax prep, loan application, credit check, and “junk” fees. The IRS has shut some of these companies down, but new ones keep popping up. Please do your homework and make sure that the company is legitimate before using their services. 

If you’ve been rejected for a refund loan, try reaching out to the company to find out why. It may be that it’s something that’s fixable (like not having the right documents), and it’s worth trying again. But if it’s something more serious, like an offset or credit problem, trying again may not be worth it. All is not lost, however: Tax season opens soon, and the IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days.

Did you owe an estimated tax penalty for 2018 but didn’t claim the waiver? All is not lost. The Internal Revenue Service (IRS) has announced that it is waiving the estimated tax penalty for those eligible taxpayers who filed their 2018 federal income tax returns but did not claim the waiver. The relief is expected to impact more than 400,000 taxpayers. 

You already know that the Tax Cuts and Jobs Act (TCJA) made significant changes to individual taxes, including cutting tax rates, tweaking itemized deductions normally claimed on a Schedule A, and eliminating personal exemptions. As a result, the withholding schemes were not adequate for many taxpayers in 2018, causing the General Accounting Office (GAO) to warn that unless adjustments were made to withholding, some taxpayers might owe more in 2019. That turned out to be true and early in the year, the IRS announced that penalty relief might be available to some taxpayers. In March of 2019, the IRS expanded the relief to include those taxpayers making payments of at least 80% of the tax shown on the return for the 2018 taxable year.

Unfortunately, not everyone got the memo. So, the IRS is now tweaking the process with an automatic waiver: The automatic waiver applies to any individual taxpayer who paid at least 80% of their total tax liability through federal income tax withholding or quarterly estimated tax payments but did not claim the special waiver available to them when they filed their 2018 return earlier this year. The IRS will apply this waiver to tax accounts of all eligible taxpayers, so there is no need to contact the IRS to apply for or request the waiver.

“The IRS is taking this step to help affected taxpayers,” said IRS Commissioner Chuck Rettig. “This waiver is designed to provide relief to any person who filed too early to take advantage of the waiver or was unaware of it when they filed.

The IRS has confirmed that, over the next few months, the agency will be sending letters to affected taxpayers. Taxpayers who are eligible for relief will receive a CP 21 notice. 

So what if you’ve already paid the penalty? You may be entitled to a refund. Refunds for eligible taxpayers will be mailed about three weeks after the CP 21 notice.

If you haven’t filed your 2018 tax return yet, the IRS urges you to claim the waiver when you file. This includes those (like me) with extensions to file through October 15, 2019. The penalty waiver should appear automatically if you use a tax software package. If you choose to file on paper, you’ll need to fill out form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts (downloads as a PDF), and attach it to your 2018 return. 

To avoid surprises next year, the IRS has launched a new Tax Withholding Estimator that they hope will make it easier for everyone to figure the right amount of tax withheld during the year. You can find out more here.