It’s TaxQuips time from TaxMama.com®.
Today TaxMama® wants talk to you about the biggest question out there – Where is my #$#DE Refund?
Are you still waiting for your IRS refund? Has it been 3, 4, 6 months since you filed your tax return, and you’re still singing, “where oh where has my poor refund gone. Where oh where can it be?”
Well, the good news is – you’re not alone.
Why is that the good news? Because you’re probably thinking that you’ve done something wrong, and they are holding up YOUR refunds as a result. No, it’s not you. It’s the entire process that is facing a complex series of problems. If we have time, I will tell you what’s going on.
In the meantime, what should you do?
Let’s start with what NOT to do:
- Do NOT call the IRS – you’re going to waste a lot of time sitting on hold – and probably get disconnected before you even get to someone. And finally, finally, when you reach someone, they are going to say, “Uh…I don’t know.”
- Do NOT call your tax professional. Their job ended when they either electronically filed your tax returns, or gave you the printed version so you could mail them in. NOT included in the fee is helping your sort out IRS problems – that’s your job.
- Don’t call the Taxpayer Advocate Service (TAS). Unfortunately, this is not a unique situation. Millions of people are in the same position – TAS cannot help you.
OK, so what CAN you do?
The IRS has recently expanded their online tools for your use. For several years, they have been planning to increase the do-it-yourself capability of the IRS websites and apps. Naturally, security has been a major consideration. As a result of the pandemic, they have moved the timetable forward and increased you capabilities. So…
- Start with the IRS Where’s My Refund tool
Oh…you’ve already done that, and it says something useful, like “Still processing?” What’s next, then?
- Go to the enhanced IRS My Account tool
- Among other things, you will have access to your IRS accounts via the Get Transcript tool. IF there is any progress on your refund, the information will be there.
- If you don’t really understand how to read or access your transcripts, this system will let you link up to your tax professional’s power of attorney and approve it on the spot.
- You will be paying your tax professional for researching your transcripts and account records and translating that information for you. Do not expect them to include this as part of your tax preparation service – unless you have already subscribed to their services for this purpose.
- If there is still no definitive information, then what?
- Take a deep breath.
There is nothing to be gained by stressing, calling, and haranguing the IRS or your tax professional. It won’t speed anything up. Things will get processed in their own good time.
- I have recently heard that someone received their refunds from their March 2020 tax return – so they are remarkably far behind – especially when tax returns were filed on paper.
- The IRS announced that they have started to process the refunds for the non-taxable unemployment compensation of $10,200. Naturally, they started issuing the refunds on the simplest tax returns first – folks who didn’t have tax credits or itemized deductions that needed to be considered. They will work their way through the rest of the tax returns, little by little.
Meanwhile, if you are affected by the refundable unemployment taxes and/or the refundable Premium Tax Credit penalties – do not amend your returns. WAIT for the IRS to finish processing your refunds internally – THEN amend to catch the related adjustments that they missed. Yes, there will be reason to amend at that time – but don’t amend in advance. It will only mess up all the computations – and it will take about two years to sort out. Avoid that by simply being patient.
So what’s holding up all these refunds? Aside from experienced IRS staff retiring in droves during the pandemic? Aside from the IRS still struggling with distancing, remote employees, etc.?
Fraud is holding up your refunds. Although the tax criminals are few in number, they are generating so many tax returns with fraudulent refundable credits and fraudulent head of household statuses that increase the amount of fraudulent refundable credits, that the IRS (Criminal Investigation Division) has to review tax returns that include the Earned Income Credit, Child Tax Credits, American Opportunity Credits and Head of Household status.
If you are upset by this – and you have friends or neighbors who are bragging about ripping off the system – blame them for your delays. And if you know of a tax preparer (not a professional) who is running a phony refund mill – they are intensely responsible for your delays. When you get angry enough, feel free to report them to the IRS to discourage future fraud, theft and delays of your refunds. This IRS page will give you all the information you need.
Meanwhile, best advice for the long term?
Do not file tax returns on paper.
Do not make payments via paper check.
Make best use of the IRS’ electronic and online tools.
And make sure that you wait to file tax forms until you have received ALL your W-2s, 1099s, etc.
And remember, you can find answers to all kinds of questions about taxes and business issues, and EA Education, free. Where? Where else? At https://iTaxMama.com/AskQuestion
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