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will government shutdown affect tax refunds

The U.S. experienced a partial government shutdown from Dec. 22, 2018 to Jan. 25, 2019. This 35-day shutdown was the longest in U.S. history and disrupted the service of multiple federal agencies, such as the National Park Service. However, the IRS did not stop work entirely. Many of its employees were furloughed (temporarily laid off) and some services experienced interruptions or delays, but others didn’t. What does this mean for your tax return?

The Shutdown Will Not Delay Tax Refunds

The short and simple answer is that the shutdown will not affect your tax refund. You can expect to receive your refund according to the same refund schedule.

The IRS furloughed more than 80% of its employees during the shutdown, but it did not close entirely. In previous shutdowns, the IRS was not open to issue refunds. While this shutdown ended just before the beginning of the tax season (Jan. 28, 2019), the IRS insisted throughout that tax season would start on time and it would still be able to issue refunds. In fact, for the month leading up to tax season, the IRS recalled some furloughed employees (still without pay) to have them prepare for tax season.

To track your refund, you can use the Where’s my Refund? tool from the IRS. Your return status should be available within 48 hours of filing if you e-filed.

Will the Shutdown Affect Your Tax Return at All?

You may have to delay filing your taxes a bit if you have questions about your return and you prefer to ask your questions directly to an IRS employee over the phone. During the shutdown, the IRS had a reduced staff and also had a reduced capacity to answer phone inquiries. Not everyone who called into the IRS with a tax question received an answer. This will continue into (and potentially throughout) the tax season. That’s especially concerning given that this is the first tax filing season under the new tax rules, which may lead to a lot of questions from taxpayers.

If you have questions, the IRS recommends first going to its website for an answer. A good tax filing service will also answer many, if not all, of the questions you have about your return. If you have a particularly complicated tax situation, considering working with a financial advisor who specializes in tax issues.

What If There’s Another Shutdown?

will government shutdown affect tax refunds

It’s important to mention that the deal that ended the shutdown only provided funding through Feb. 15. If legislators cannot come to another agreement before that date, there will be another shutdown. If there is another shutdown, it would come right in the thick of tax season.

Even if there is another shutdown, it’s still unlikely that you would see big delays for your refund. The IRS would probably continue to have vital employees work, just as it did leading up to the start of tax season. The exception is that delays may be an issue toward the end of tax season if there was a shutdown after Feb. 15 and it dragged on for a significant amount of time.

Returns With the EITC or ACTC

If you claimed the earned income tax credit (EITC) or the additional child tax credit (ACTC), you won’t receive your refund until about Feb. 27 at the earliest. The law requires the IRS to hold refunds until Feb. 15 if they claim either of these credits. So even if you file on the first day that the IRS accepts returns, you will wait weeks for your refund.

This isn’t a result of the shutdown, though. The extra time allows them to check that returns claiming these credits actually qualify for these credits.

The Takeaway

will government shutdown affect tax refunds

The government shutdown from Dec. 22, 2018 to Jan. 25, 2019 was the longest the U.S. ever had. However, the IRS continued its normal preparation for tax season and so you won’t see any delays in the processing of your return. That also means the shutdown will not delay your refund. The IRS also insists that there will be no impact even if another shutdown should happen on Feb. 15.

The only potential impact is that you may have a difficult time reaching the IRS over the phone. So consider the IRS website if you have questions about filing your return. To prevent other delays to your refund, the IRS also recommends that you e-file and elect for direct deposit of any refund.

Tips for Navigating Tax Season

  • If your tax situation is a bit complex and you have questions, consider working with a tax preparer. These are experts in the tax code who can guide you through the filing process. Just make sure choose the right tax preparer to work with. You might also use one of these top-rated tax prep programs.
  • Have your taxes grown increasingly complicated as your net worth and assets have grown? To help you plan this and other financial decisions throughout the year, reach out to a financial advisor. An advisor will sit down with you, consider your entire financial situation and then help you create a plan that maximizes your earnings. This includes talking about taxes, retirement savings, investments and other big financial decisions. You can find a local advisor with this financial advisor matching tool. Just enter some information about your financial situation and goals, and you’ll be matched with up to three advisors in your area.

Photo credit: ©iStock.com/fizkes, ©iStock.com/Maksim Kamyshanskii, ©iStock.com/RyanJLane

Derek Silva, CEPF® Derek Silva is determined to make personal finance accessible to everyone. He writes on a variety of personal finance topics for SmartAsset, serving as a retirement and credit card expert. Derek is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance® (CEPF®). He has a degree from the University of Massachusetts Amherst and has spent time as an English language teacher in the Portuguese autonomous region of the Azores. The message Derek hopes people take away from his writing is, “Don’t forget that money is just a tool to help you reach your goals and live the lifestyle you want.”
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