There are 1.9 million individual tax returns that remain unprocessed for various reasons — from 2022 alone. This has always been a problem from an efficiency standpoint, especially since tax season has found its way back around and that number stands to grow significantly. However, with the rising cost of living amid inflation, many Americans are highly anticipating a tax refund to pad their bank accounts.
The IRS has already made a clear disclosure not to expect swift processing and refund disbursements within the typical 21-day window. Why? For “additional review” to “detect a possible error,” specifically for those that fail to include the correct information or are suspected of foul play. But there are some ways to speed up the process.
Taxes are getting more complex with each passing season. To ensure you are complying with all the new tax stipulations as well as receiving all the credits and deductions you are owed, consult a financial advisor for assistance.
The 3 Reasons Your Tax Refund is Late (Again!)
Even with new tax code changes and constant IRS updates, the truth is that delayed refunds and processing have always been an issue. The humor in this is that it’s typically for the same set of reasons year after year.
- Incorrect information: In 2015, the IRS audited 1.2 million individual tax returns of these there were over 2 million clerical errors. We can assume that this number has significantly increased along with new taxpayers entering the workforce over those seven years.
- Missing information: Although this may seem in line with being “incorrect” this is a more specific problem that deserves a call out. For example, the IRS is cracking down on 1099 workers now more than ever due to missing 1099 income. Gig economy workers like Instacart shoppers, for example, used to not be required to claim self-employment income under $20,000. Today that threshold is $600.
- Paper Filing: As hard as it might be to believe, there are still 21 million people who filed a paper return last year that hasn’t been processed. You can imagine the errors from bad handwriting alone. And that number isn’t decreasing; in fact, it’s up 7% from last year.
There are other reasons that delays occur, but they tend to fall on the staffing issues of the IRS which are unable to meet the needs of the public. This could see a shift within the coming tax seasons, but for the time being, it will be a prevailing issue. All the more reason you need to cover your end and all that is in your control.
Use SmartAsset’s Free Tax Return Calculator to see an estimate of what your refund might be.
Tax Prep Checklist to Speed Up Your Return
Double-check your entries manually: Accounting and tax software is intuitive – not perfect. It can notice some discrepancies, especially if you’ve filed through the platform in previous years, but it’s more so a check that the boxes are filled.
Claim all of your income: Whether you are self-employed or have a small side hustle, you need to be upfront. If you receive a 1099, you need to claim it (from $50 to $5,000). Failing to do so is equivalent to underreporting your income.
Go digital: There are four ways to file your taxes digitally:
- IRS Free File
- Free tax preparation Sites
- Finding an authorized e-file provider
- Use Commercial software
Opt-in for direct deposit: When you submit your bank information, it removes the task on the IRS of having to issue and mail out a check. Plus, the timeline for snail mail can vary from a few days to longer depending on where you live. With direct deposit, you can just set-it-and-forget-it
File Early: Tax season kicks off on January 23rd for individual filers. Those that submit early are queued up to have their submission received, reviewed, and processed earlier as well. If all goes well, you should receive your refund far earlier than someone who waits until the filing deadline.
The Bottom Line
Some elements of the tax season will forever remain out of your control, but the biggest faults in the system are typically self-inflicted. As much of a hurry as you’re in to file your taxes, the timeline for a refund can more than double if you have to wait for a decision and resubmit due to an error.
Tips to Make Filing Taxes Easier
- You might also consider turning to a financial advisor for tax planning services, which can ensure tax efficiency. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Start gathering financial documents early. Set a deadline for when you’ll have your W-2 forms, 1099 forms, investment income information, last year’s tax refund, student loan interest and the rest of the items listed on the IRS Tax Form checklist. By breaking the intimidating task of filing your taxes into smaller chunks, you have a better chance of avoiding a last-minute marathon session to meet the filing deadline.
- Educate yourself as soon as possible about what you can and can’t deduct from your taxes. It pays to know everything you can about how taxes impact your situation in order to maximize your tax return.
Photo credit: istockphoto.com/sasirin pamai, Pavel Muravev,serggn