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Why is my refund delayed?

By Kay Bell

Filed your taxes and expecting a refund? The IRS issues most refunds within 21 days after receiving a return, except in certain circumstances detailed below.

Check your refund status online anytime with the IRS “Where’s my Refund” tool or download the IRS2Go mobile app. The IRS recommends waiting 24 hours from when it received your return via e-file or four weeks for paper returns.

Still not seeing your refund? Here are five common reasons why your refund is delayed and what you can do about it:

1. You claimed EITC or a related tax credit.

Starting with the 2017 tax-filing season (your 2016 return), if you claimed the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), your tax refund was delayed until mid-February at the earliest.

This is due to the Protecting Americans from Tax Hikes (PATH) Act of 2015, which was designed in part to fight fraud. It ordered the IRS to hold refunds associated with returns claiming either of these two tax credits until Feb. 15 to allow extra time to check filing data.

The IRS warned that refunds associated with these credits might be delayed until Feb. 27, providing there were no other issues with the return.

What you can do: Unfortunately, if you claim the EITC or ACTC, there's no way to prevent this mandated tax refund delay. Instead, prepare for the wait by adjusting your budget the best you can.

2. Your tax return may have been flagged by the IRS.

Tax identity theft is a massive problem in the U.S. One Treasury audit predicted the IRS would pay out $21 billion in fraudulent refunds from 2012 to 2017. This puts tremendous pressure on the agency to adopt more stringent tax return processes.

This filing season, the IRS will use 37 additional return-data checkpoints to strengthen the authentication process and ensure returns are legitimate.

Such added security, however, slows the process and can produce high false positives. Up to 36 percent of returns are mistakenly flagged, says national taxpayer advocate Nina Olson, citing filters as one of the most serious problems facing taxpayers in her 2015 annual report to Congress.

If your return is flagged, the delays can be significant. The IRS Taxpayer Advocate Service found that returns flagged by the IRS' Electronic Fraud Detection System in 2014 experienced average delays of nearly 18 weeks.

What you can do: If your return is delayed beyond the expected 21 days, stay in touch with the IRS. Call for refund updates at 1-800-829-1954 and contact the Taxpayer Advocate Service for assistance if the refund delay is causing you a financial hardship.

3. Your identity may have been stolen.

Despite increased security measures, criminals still manage to steal refunds.

One way to discover that you’ve been victimized is by getting a message your return has already been processed when you go to file – a major red flag. Other warning signs from the IRS:

  • There is tax activity for a year you did not file a tax return. This may look like additional taxes owed, a refund offset or collections for unpaid taxes.
  • There is an IRS record in your name from an unfamiliar employer.

What you can do: One of the best defenses against tax-related fraud is to file your return as early as possible. Once you’ve filed and the IRS has accepted your return, no one else can file in your name. The IRS also advises consumers to respond immediately to any IRS notice by calling the number provided or, if instructed, go to IDVerify.irs.gov.

You may also need to complete the fillable IRS Form 14039, or Identity Theft Affidavit. Complete the Fillable Form, print and attach to your paper return. Attach a clear photocopy of an identifying document, such as your driver’s license, passport or Social Security card. Mail all this to the IRS address on the form. Continue with your return, the IRS advises, even if you need to file by paper.

You can also contact the IRS for specialized identity theft assistance at by calling 1-800-908-4490.

Next you should file a complaint with the Federal Trade Commission at identitytheft.gov and request a fraud alert for your credit profile from at least one credit bureau. They will share with the other bureaus. Credit bureau contact information:

Read more: What is a security freeze?

4. You moved and didn't tell the IRS.

Although most taxpayers now receive refunds by direct deposit, some still prefer mailed checks. This could pose a problem if you’ve recently moved.

If your expected refund check still hasn't arrived despite a change of address form, it may have gotten returned to the IRS. Not all post offices forward government checks, according to the IRS, so simply notifying the post office doesn't necessarily guarantee your refund check will follow you.

What you can do: Any time you move, you should share your new address with the IRS directly by filing Form 8822. It's not available to submit electronically, but you can open the Fillable Form on your computer, complete it and then mail it to the IRS.  If you're married and file a joint return, both you and your spouse should sign. The IRS details a few other ways you can share an address change.

5. Your refund may have been stolen or misdirected.

Your refund might have been delivered, either as a check or as a direct deposit, but you never received it.

In the case of mailed checks, it's possible the check got lost in the mail or was stolen from your mailbox. As for direct deposits, you might have entered the wrong bank account or routing numbers.

What you can do: If a paper refund check never shows up, initiate a refund trace by calling the IRS at 1-800-829-1954. If you're married and filing a joint return, you'll need to complete Form 3911 to get the refund check replacement process started.

For a missing direct deposit, contact your bank first. Generally, if the financial institution recovers the funds and returns them to the IRS, the IRS will send you a paper refund check to your last known address on file.

If your bank isn't responding to your questions, file Form 3911 which gives the IRS the authority to contact your bank on your behalf and attempt recovery of your tax money. Banks have 90 days from the date of the initial trace input to respond to an IRS request for information.

If your electronically deposited refund amount hasn't yet posted to the IRS system and you believe something is amiss on the IRS end, you can ask the agency to stop the direct deposit by calling 1-800-829-1040.

Note that the IRS assumes no responsibility if you or a tax professional entered the wrong direct deposit information. Be sure to double-check all account information before submitting your return.

Bottom line

No one likes to wait for their hard-earned money to be returned to them, but there are steps you can take to protect yourself against fraud and speed up the process wherever possible.

If you routinely get outsized refunds, though, consider adjusting your tax withholding with your employer. There is no reason for the IRS to keep big chunks of your money throughout the year — with no interest paid to you — when it could be benefiting from the power of compound interest in a retirement, savings, college or low-risk investment account.

Read more: 5 steps to successful savings

 

About the Author: Kay Bell has been a dedicated tax geek for two decades. The award-winning journalist, book author and creator of the Don't Mess With Taxes blog is a native Texan (that explains her blog's name). She's also an avid sports fan, so when she's not delving into the Internal Revenue Code, she's sorting through the performance stats of her Baltimore Orioles, Houston Astros, Washington Capitals and Dallas Cowboys. Connect with her on Twitter @taxtweet.

Disclaimer: We know taxes are complicated, so we provide this information for general educational purposes only. It isn’t intended to be personalized legal, financial or tax advice, and we don’t guarantee the accuracy, completeness or reliability of this content. If you have questions about your personal tax situation, consider contacting an accountant, tax attorney or financial advisor. Come back to Credit Karma Tax when you’re ready to file your taxes for free!

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