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When Should I Get My Tax Refund?
When should I get my tax refund? The IRS typically issues refunds in under 21 days, but the COVID-19 pandemic has delayed refunds.
File your return electronically to speed up the process. You can also invest your tax refund once you receive it. In some cases, the IRS will contact you if it needs more information. If this happens, it could take up to eight weeks to receive your refund.
Tax refunds are issued in less than 21 days
In most cases, you can expect to receive your tax refund in less than 21 days if you filed your return electronically and selected direct deposit.
The timeframe for processing your refund can vary, though, because many factors may affect the timing.
If your return has errors, incomplete information, or was the victim of fraud or identity theft, a manual review may be necessary. Other returns may take anywhere from six to 14 weeks.
The IRS has a huge backlog of unprocessed returns, causing delays for millions of Americans. The agency recently released a press release warning taxpayers not to count on their refund to cover major expenses, like paying their bills.
In an update to their operations page, the IRS noted that 7.2 million unprocessed individual returns have errors or need special handling. In addition, the agency has reported a significant increase in the number of paper returns submitted.
Filing electronically speeds up the process
Whether you are filing your tax returns yourself or enlisting the services of a professional tax preparer, you’ll benefit from the efficiencies of electronic filing.
You’ll avoid the lengthy, inefficient process of mailing a paper tax return to the IRS and waiting for a check to arrive in the mail.
E-filing also helps speed up the process of receiving your refund. If you file electronically, you’ll get your refund in about 8 weeks, instead of the many months it could take if you mailed a paper one.
The IRS will be able to receive your return quickly, thanks to the use of pre-approved software.
You’ll also avoid the time and inconvenience of visiting the IRS. Since tax forms are updated annually, you’ll have to decide whether to keep or give your hard-earned income to tax agencies. While e-File is available to almost all taxpayers, some taxpayers still don’t have the means to do so.
COVID-19 pandemic delays refunds
In a recent letter, Congressman Andy Levin, a Democrat from Michigan, and Representative Carol Miller, a Republican from West Virginia, urged the Internal Revenue Service to address the problem of delayed tax refunds caused by COVID-19.
The letter said that the IRS had to close processing centers and switch to digital processes, which has contributed to a backlog of millions of unprocessed returns.
In addition, taxpayers reported longer wait times and longer delays when attempting to contact the IRS customer service outlets.
The IRS is already backed up, and delays will only make the situation worse. Not only are refunds on tax returns delayed this year, but the IRS has to reprocess paper tax returns separately.
The delays may increase the backlog, and taxpayers may not receive their refunds until next year. During the COVID pandemic, the Internal Revenue Service has been hamstrung by a shortage of staff and increased workload.
Investing your tax refund
There are several ways to invest your tax refund when you get it, including opening up a 529 college savings plan and using it to fund your child’s college education.
Both 529 plans and the money you put into them grow tax-free, and any withdrawals that are used for qualified education expenses aren’t taxed.
In addition to investing in college, you can use your tax refund to fund a side hustle, start a business, or invest in your skills.
There are several ways to invest your tax refund, and you may even want to consider index funds or ETFs to spread the risk across various stocks and bonds.
Index funds track the S&P 500, and are generally a long-term play. They’re a great way to invest your tax refund if you don’t know what to do with it. Aside from investing in your future, this money can give you peace of mind and security in case of an emergency.
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