No Tax Refund Yet? Here’s What You Need To Know
If you’re still waiting for your 2020 tax refund, you aren’t alone.
According to the Taxpayer Advocate Service, the IRS has a backlog of over 35 million tax returns, a number that’s three times higher than 2020’s backlog and four times higher than 2019 at the same time.
For the many taxpayers who are getting a refund, the wait can be excruciating. But before you pick up the phone to call, it’s important to know that there’s a better way to keep an eye on your refund status, and there are also a few things you can do if you need the money now.
Follow along with me to learn everything you need to know to finally figure out where your refund is.
Why is there a delay?
The pandemic stretched the IRS thin
The pandemic hasn’t been easy for anyone, but the IRS has been particularly strained. Like many organizations, the agency was hit with staffing shortages and budget cuts in 2020, putting it at a disadvantage as the 2021 tax season started.
But perhaps the biggest challenge came when the agency was tasked with processing three separate pandemic relief packages over the past year. The third round of stimulus payments kicked off on March 12, 2021 – a little over a month before the usual tax filing deadline.
The tax-filing deadline was moved back
To accommodate the final stimulus payment, the tax filing deadline was moved back to May 17. That meant tax returns came in later than usual, which could explain part of the extra backlog.
But the 2020 deadline was July 15, and the backlog was much lower at this time last year.
The IRS hopes to learn from this experience
Luckily, the IRS is taking a close look at what caused the backlog. This information will be used to hopefully improve the process for future tax years.
In the meantime, there are some things you can do while you’re waiting.
Tracking your tax refund
Your first instinct might be to call the IRS’s customer support line. If you can just talk to an IRS representative, you figure, you’ll get the lowdown on your refund.
Don’t do that.
There’s a record number of calls pouring into that 800 number that everyone knows too well and that isn’t helping with the backlog.
…so, how should I follow up about my refund?
The best way to find out the status of your tax return is to simply go to the Where’s My Refund? page on the IRS website.
This page has the most up-to-date information on your return. Plus, you won’t have to wait on hold for a way-too-busy representative to be available.
Before you head to the IRS site, though, you’ll need some information. Have this available beforehand:
- Your Social Security number or ITIN.
- Your filing status.
- Your exact refund amount.
If your refund status is unavailable, it might be time to call
That said, returns can get lost. If you think it’s been an extraordinary amount of time, and the IRS tracker isn’t updating, it might be worth making a call.
Before you do, make sure your return was submitted at least 21 days ago, or six weeks ago if you filed a paper return.
The IRS will only help taxpayers research the status if that much time has passed. You’ll need to have all the above documentation in place for verification purposes.
Be sure to keep an eye on the mail
You also might want to make sure you’re keeping a close eye on your mail.
If the IRS has questions about your return, those questions will be communicated the old-fashioned way. You’ll get a letter in your mailbox with instructions on responding.
How to access the money now
The IRS keeps urging patience, but what can you do if you need the money now?
There are a few options, but it’s important to look into the cost and risk of each before you choose.
Get an advance on your refund
Tax refund advances can be tempting. Some even promise zero interest, which sounds like a great deal. But before you sign on the dotted line, make sure that you understand exactly how these advances work.
These loans use your upcoming refund as collateral on the money you’re borrowing, with payment due when your refund finally arrives.
These advances are typically offered by tax preparation companies and are approved at the time of filing.
Take out a personal loan
A personal loan can be another option for getting some money in your hands fast.
There are numerous online lenders offering competitive interest rates even for those who have less-than-ideal credit.
Shop around to see if you can qualify for a small loan to get you through, but only if you absolutely need it.
Consider a home equity loan
If you have equity in your home, another option is to tap into that equity in the form of a home equity loan or line of credit.
You’ll simply pay off the amount you borrow when your tax return comes through.
Payday loans – but borrower beware
Beware of payday loan offers. Seriously, do your very best to steer clear of them!
Yes, these services promise to issue personal loans even if you don’t have a strong credit score, but the interest rates tend to be exorbitant.
Shopping around for the lowest rate you can get on a credit card would likely leave you better off long term.
How to avoid delays with future returns
While there is very little that you can do about the delay in your 2020 return, there are some things you can do to speed things up in future tax years.
The most important thing you can do to expedite the process is to file electronically. The IRS has said that e-filing is both the best and fastest way to file your return each year.
Paper returns not only take longer to move through the postal system, but they have to be manually processed, which takes longer.
Complete your return as accurately as possible
The next best thing you can do is make sure your return is completed fully and accurately.
Of the 35 million unprocessed tax returns this year, 15.8 million have been suspended for further review and 2.7 million are returns that were amended after they were originally submitted.
Opt for direct deposit
If you are worried about your tax return being delayed, make sure you opt for direct deposit.
As stimulus payments have shown, electronic payments process faster than paper-based checks. Paper checks also can get lost in the mail.
Tax refunds may be taking a little longer this year, but with the Where’s My Refund? tool, you can at least keep an eye on things.
The IRS is warning that many refunds are taking longer than the usual 21 days, especially if you filed a paper return or there are filing issues. In some cases, the refund tool will let you know if the IRS needs more information from you, so it’s important to check it out.