Every tax season, there’s a lot of anxiety surrounding tax refunds. Everyone wants to get their money as soon as possible and we’re all antsy until that direct deposit hits our accounts or the check arrives in the mail.
Social media doesn’t help out our generally nervous state this time of year. Whether intentional or not, average taxpayers like you and me have the ability to spread rumors, innuendos and outright lies at the click of a mouse or swipe of a finger.
So to help alleviate the anxiety of tax season, we’re giving you the real scoop straight from the horse’s mouth — that of the IRS!
Debunking 5 popular myths about tax refunds
Myth 1: All refunds will be delayed this year
This one is patently untrue. Less than 21 days after a tax return is received by the IRS, there’s a ‘more than 90%’ that a refund will be issued. Twenty-one days is what the IRS defines as a normal timeframe for turnaround of a return.
There are myriad reasons why any given tax return may be held up longer than 21 days. Some reasons are very specific to individual tax credits you claim, as described in Myth 4 below. Others have to do with increased security checks the IRS has in place to combat tax return identity fraud.
Those security checks, by the way, are working. The number of false returns filed last year was 787,000 thanks to increased vigilance on the part of the IRS. That’s down from 1.2 million in 2015!
But again, remember, the IRS says 90%+ of all refunds are paid out within three weeks.
Myth 2: I can figure out my refund date by calling the IRS or my accountant
Wrong. You’ll likely just spend a lot of time on hold if you make either call.
Refund status is updated once a day, typically during the overnight hours. So there’s no need to repeatedly keep logging on to check!
Myth 3: Ordering a tax transcript will let me get a refund date on the down-low
The purpose of a tax transcript is to ‘validate past income and tax filing status for mortgage, student and small business loan applications [or] to help with tax preparation.’
Tax transcripts don’t always show the amount or the anticipated date of a refund.
If that’s not enough to deter you from trying this, need we remind you of the recent ‘Get Transcript’ hack?
Myth 4: Delayed refunds — plus those claiming EITC and/or ACTC — will be delivered on Feb. 15
Tax refunds likely to take a bit longer than 21 days are those involving the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). If you claim either credit, there’s a law on the books that requires the IRS to hold the entire refund until Feb. 15.
Assuming there’s no other holdup with your return, you can then expect the funds to make their way to you during the week of Feb. 27. That lag time allows for President’s Day (Feb. 20), a federal holiday during which no business is transacted.
Myth 5: ‘Where’s My Refund’ must be wrong because there’s no deposit date yet
No, the system is not broken!
If you claimed the EITC or ACTC tax credits as described above, the IRS says you shouldn’t expect to see your projected refund date show up on the “Where’s My Refund?” tool until a few days after Feb. 15.
And you know the drill by now: Don’t expect the refund money to arrive until the week of Feb. 27 at the earliest — assuming that you opted for direct deposit and there are no holdups with your return.
That extra processing time is needed for banking and financial systems to handle the deposits. Plus, President’s Day throws a monkey wrench into things with that additional non-business day when no payments can be processed.