How Long Can The IRS Hold Your Refund For Review?

How Long Can The IRS Hold Your Refund For Review?

There might be many reasons why the Internal Revenue service might review and hold off your refund. The general norm is to file for your income tax return via electronic means through a computerized system where the system scans and reviews your return application. In most cases, if the return is free of errors, the IRS will accept it. However, there might be a chance of your return containing errors or it might include deductions or credits that are out of the ordinary. In such scenarios, a representative from the Internal Revenue Service will review your return physically. 

Although the average tax filer might find the tax season quite demanding, the redeeming feature is that many tax filers will receive a refund. Numbers from the past have consistently shown that about 75% filers receive refunds post filing their tax return from federal income. Many of us lean on the tax refunds to pay off the bills or debts during the first half of the year. This leads to arduous situations if there are delays in receiving your tax refunds. We look at some typical reasons for delays in tax refunds and the measure that might help you prevent a delay:

Inaccurate Information Present In Your Return

There can be situations where your tax return has mistakes or numerical errors wherein your refund might be held off for a long time. Upon the detection of an error in your return, it is designated for physical review implying that an employee from IRS must investigate it to detect the mistake. This can result in increased wait time added to your return’s processing time. 

Incomplete Return

IRS reviews can also be triggered by incomplete returns which could hold up your refund for a longer period of time. For instance, if your return was filed on paper and you forgot to fill in critical information such as your Social Security Number or misspell your address or date of birth, or did not sign your tax form, the Internal Revenue Service cannot process your tax return unless the above information is corrected and checked off. 

Tax Fraud Alert

Tax-related identity theft can happen when someone else files a fraudulent tax return using your personal information and claims a refund in your name. The statistics for the tax-filing season of 2019 pointed to a rough estimate of $15.8 million in falsified refund claims with greater than 3,800 unauthorized returns related to identity theft. Anybody who suspects having been unlawfully cheated by tax-related identity theft is encouraged to report fraud to the Federal Trade Commission and contact the Internal Revenue Service reporting the same. 

The Wrong Bank Receives Your Tax Refund

Electronic mode of tax filing is the easiest and quickest way to receive your refund via direct deposit assuming that you filled inaccurate information and the correct account number of your bank while filling out the tax return form. If you mistakenly switched digits in your routing number of savings account number, your money could end up being redirected to another person’s account. 

Certain Tax Credits Were Claimed By You

Some tax credits that you may claim might lessen your liability for tax on a dollar-for-dollar level. Tax credits viz. Additional Child Tax Credit, and Earned Income Credit frequently draw careful perusal from the Internal Revenue Service since these credits have a high fraud-rate for claims. If you fall into the category of having claimed either of the aforementioned credits, it could very well be under scrutiny by the IRS which is why you haven’t received your refund yet.

Tax Return Amended By You

Hold offs can also happen due to amending your tax returns. Returns that are altered, or revised need to be sent by mail instead of filing electronically. It can take up to three weeks for amended returns adjusted by you to display in the IRS system and an extended four month or sixteen weeks to get processed implying that you will have to end up standing by for several months to receive your refund. 

Mathematical Misprints 

In scenarios where the tax return contains miscalculations or mathematical flaws, it is the Internal Revenue Service’s responsibility to tidy up the information which can lead to additional inspection times. For instance, if there was a situation where you interchanged two digits, the IRS will align the error made mathematically but this revision will lead to extra processing time and as a result, your refund which is due will get delayed as well. 

Miscalculating Credits or Deductions

Preparing your own returns comes with the responsibility of calculating your credits and deductions too. If you are unconversant with the tax return process, it can be daunting to understand whether to use your adjusted gross income or plan gross income to calculate a credit or deduction. If you commit errors during credit or deduction calculation, your return will be flagged for further processing by the Internal Revenue Service. This will lead to a manual review by an IRS representative again who will re-evaluate your credits and deductions and ensure that your return is accurate. “Red flags” generally trigger an evaluation thereby delaying processing times of refunds. 

Missing Forms

Forgetting to attach a form in addition to your income tax return can result in the IRS preparing one for you which can further spark a delay and extend the evaluation time of your return. 

These are some of the most common causes for experiencing delays in your refund process. Sometimes your refund could also get delayed if it gets lost in the mail which never reaches you. There could also be a possibility of having your refund stolen from the mailbox which could be another delaying cause. Additionally, government shutdowns like the incident that occurred from December 22, 2018 until January 25, 2019 can also lead to longer wait times because the federal bodies need to be up and running in order to process refunds quickly. You can always contact the local IRS office for additional help in case the “Where’s My Refund” tool is not working or does not provide you with the information you are looking for. Contacting the IRS office will help them trace your refund in order to find the root cause and issue a replacement if necessary, in genuine cases.

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