Myths About Tax Refunds
Tax filing deadline has come and gone, and many taxpayers are eagerly awaiting their tax refunds. As such, the IRS thought this an appropriate time to release their compilation of seven common myths about tax refunds.
Being that I am indulging in a bit of post-tax season vacation this week, I'm taking the easy way out and putting those here just as the IRS posted them. I hope you will pardon my lack of creativity this week!
Myth 1: Calling the IRS or visiting an IRS office speeds up a refund
Many taxpayers mistakenly believe the commonly held myth that speaking with the IRS by phone or visiting in-person at an IRS Taxpayer Assistance Center will expedite their tax refund. The best way to check the status of a refund is online through the Where's My Refund? tool at IRS.gov or via the IRS2Go mobile app. Alternatively, those without internet access can reach Where's My Refund? by calling the automated refund hotline at 800-829-1954. IRS Taxpayer Assistance Centers operate by appointment and inquiring about a tax refund's status does not expedite the process.
Myth 2: Taxpayers need to wait for their 2020 return to be processed before filing their 2021 return, or that all refunds are delayed due to the number of 2020 returns the IRS still needs to process.
The reality is that taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns. They should file when they're ready. People with unprocessed 2020 tax returns, should enter $0 (zero dollars) for last year's AGI on their 2021 tax return when electronically filing.
Myth 3: Taxpayers can get a refund date by ordering a tax transcript
Ordering a tax transcript will not inform taxpayers of the timing of their tax refund, nor will it speed up a refund being processed. Taxpayers can use a transcript to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation. But the Where's My Refund? tool is the fastest and most accurate way to check the status of a refund.
Myth 4: Where's My Refund? must be wrong because there's no deposit date yet
While the IRS issues most refunds in less than 21 days, it's possible a refund may take longer for a variety of reasons, including when a return is incomplete or needs further review. Delays can be caused by simple errors like an incomplete return, transposed numbers or when a tax return is affected by identity theft or fraud. The Where's My Refund? tool only updates data once a day – usually overnight.
Myth 5: Where's My Refund? must be wrong because a refund amount is less than expected
Different factors can cause a tax refund to be larger or smaller than expected. Situations that may decrease a refund can include corrections to any Recovery Rebate Credit or Child Tax Credit amounts, delinquent federal taxes or state taxes and past due child support. The IRS will mail the taxpayer a letter of explanation if these adjustments are made. The Department of Treasury's Bureau of the Fiscal Service may also send a letter if all or part of a taxpayer's refund was used to pay certain financial obligations.
Myth 6: Calling a tax professional will provide a better refund date
Contacting a tax professional will not speed up a refund. Tax professionals cannot move up a refund date nor do they have access to any "special" information that will provide a more accurate refund date. The Where's My Refund? tool provides taxpayers with the same accurate and timely information that a tax professional, or even an IRS telephone assistor can access.
Myth 7: Getting a refund this year means there's no need to adjust tax withholding for 2022
Taxpayers should continually check their withholding and adjust accordingly. Adjusting tax withholding with an employer is easy and using the Tax Withholding Estimator tool can help taxpayers determine if they are withholding the right amount from their paycheck. Taxpayers who experience a life event like marriage or divorce, childbirth, an adoption, home purchase or major income change are encouraged to check their withholding. Withholding takes place throughout the year, so it's better to take this step as soon as possible.