The tax deadline passed just a few weeks ago. In case you don’t receive your return soon, here are 5 reasons why.
It’s a fact: People despise waiting. In 2012, Timex asked people how long they were willing to wait before their patience timers ran out. The shortest wait was for coffee at seven minutes. The longest was reluctantly watching sports on the weekend. People were willing to wait nearly two hours before they changed the channel or left the room for that one.
Unfortunately, the wait time for a tax refund wasn’t included in the Timex study. Like it or not, most people wait around three weeks for a tax refund, but errors, oversights, identity theft or claiming certain refundable credits can lead to even longer delays. We wanted to find out what causes these delays and what can you do to avoid them next year.
Reason #1: Your Tax Submission is Missing Information or Has Errors
Missing or incorrect information is one of the most common causes of delayed refunds. Be sure to double check Social Security numbers and make sure your name (and the name of your spouse and dependents) matches the name on file with the Social Security Administration.
If you file Form 1065 or Form 1120-S for your business, ensure the partner/shareholder names and Social Security numbers shown on the K-1s are correct, and the company name matches the name on file with the IRS.
Failing to report all income can also cause delays, so make sure you include all income from W-2s, K-1s, 1099s, etc.
If at all possible, have your refund direct deposited. The IRS says they issue more than 9 out of 10 direct deposited refunds in less than 21 days. Whether you file your return electronically or on paper, direct depositing your refund is faster than waiting for a paper check. Just make sure you double check the bank routing number and account number. If you enter the wrong account number and your refund gets deposited into someone else’s account, you’ll need to work with the bank to recover your money.
Reason #2: You Filed a Paper Return
The IRS strongly encourages all taxpayers to e-file returns. The tax software you use to e-file your return helps avoid mistakes from incorrect names or Social Security numbers, as the system will usually reject an e-filed return with those issues.
Because there is no waiting on mail or processing of paper, you’ll usually receive your refund much faster.
If you must file a paper return, be sure to attach copies of any W-2s or 1099s that include federal tax withholding. Failure to attach those forms to a paper return will result in processing delays.
Reason #3: Your Estimated Payments Applied to the Wrong Account
Once, I worked with a client who set up a single-member LLC for her consulting business and obtained a Tax ID number for the business. All smart moves, except when she made her quarterly estimated payments, she used the Tax ID number for her business instead of her Social Security number. The IRS had over $100,000 of her estimated tax payments, but because the payments had been applied to the business’ Tax ID instead of her SSN, they were sending her notices telling her she owed moreContinue reading