Welcome to our guide on navigating the tax refund process with the IRS. Understanding how tax returns and refunds work can sometimes feel overwhelming. This guide is designed to simplify the journey for you, from preparing your tax return to finally receiving that much-awaited refund.
We’ll walk you through each step, clarify common misconceptions, and provide practical tips to ensure your tax filing experience is as smooth as possible. Whether you run a small business or are an individual waiting for your tax return, this guide aims to equip you with the knowledge you need for a stress-free tax season.
If you’ve ever wondered ‘How long does it take for IRS to approve refund after it is accepted?’ this guide is for you!
Tax filing process
Let’s quickly look at how the process of tax filing works until it reaches the IRS.
Step 1. Preparing your tax return
Step 2. Filing the return
You can file your tax return either electronically (e-filing) or by mailing a paper return. E-filing is faster and more secure. When you file, you’re essentially sending your financial information to the IRS for the year.
Step 3. Acknowledgment of receipt
When you submit your tax return, the first thing the IRS does is check if it’s complete and free of obvious errors. This could include things like missing signatures or grossly incorrect figures. If your return passes this initial check, the IRS will “accept” it. This means your return is valid enough to be processed further.
Step 4. Approval of the refund
Once your return is accepted, the IRS starts the more detailed process of examining your return. This is where they really get into the nitty-gritty of your finances for the year. They’ll check your income reports, verify the deductions and credits you’ve claimed, and ensure everything aligns with the tax laws.
If you’ve paid more tax during the year than you owe (based on your final return), the IRS will calculate the amount that needs to be refunded to you. This is a crucial step because they need to make sure every dollar of your refund is accounted for correctly.
Once the IRS is satisfied that your return is accurate and they’ve calculated your refund, they will approve it. This means they’ve officially decided you’re entitled to a certain refund amount.
This process, especially the approval of your refund, can take some time, usually within 21 days if you’ve e-filed, but possibly longer depending on various factors.
Step 5. Sending of the refund
After the IRS approves your refund, they will proceed to issue it. This is when the IRS actually sends out the money you are owed. The method of refund delivery depends on what you select when you file your return.
If you choose direct deposit, the IRS will transfer the refund amount directly into your bank account. This is the fastest method, and you can typically expect to receive your refund within a few days after the refund has been approved.
If you opted for a paper check or if there were issues with your direct deposit information (like incorrect bank details), the IRS will mail a paper check to the address on your tax return. This method can take longer, often several weeks, due to postal delivery times.
What’s the difference between IRS acceptance of a return and approval of a refund?
There are crucial stages of your tax return processing that can help you figure out what is happening with the documents you submit to the IRS. Let’s look at the difference between return received vs. refund approved.
IRS acceptance of a return: Return received
When the IRS accepts your return, it means they’ve received it and scanned it for basic errors, like missing information or major red flags. Your return is in the queue for processing.
Approval of a refund: Refund approved
Approval of a refund means that the IRS has reviewed your tax return in detail. They’ve checked your income, your deductions, and any credits you claimed. If everything adds up and you’ve paid more taxes than you owe, the IRS approves your refund. This is the point where they determine the exact amount you’ll get back.
How long does it take for a refund to go from received to accepted?
The time it takes for a tax return to go from “received” to “accepted” can vary. Typically, if you e-file your tax return, this transition can happen quite quickly, often within a few days. For paper-filed returns, this process can take longer due to the time needed for the physical document to reach the IRS and be manually entered into their system.
However, there are more special circumstances that could increase your wait time. Let’s look at them closely.
Factors influencing refund approval time
While the IRS tries to process the returns promptly, several factors can stretch the waiting period for your refund to arrive.
The roadblocks or detours in the journey of your tax refund can slow things down because the IRS needs to be extra careful in these situations to make sure everything is correct and fair.
Electronic vs. paper filing
Electronic filing (e-filing) is fast and reaches the IRS almost instantly. Because of this, refunds for e-filed returns are generally processed quicker, often within 21 days. With paper filing, however, it takes longer to reach the IRS, and once it does, it takes them more time to process it manually. Refunds for paper-filed returns can take significantly longer, sometimes up to six to eight weeks.
Mistakes in the documents
Mistakes like incorrect Social Security numbers, math errors, or missing forms can slow down the process as the IRS will need to correct or request additional information.
If there’s suspicion of fraud or identity theft, the IRS will take extra time to verify the legitimacy of the return. This is a necessary step to prevent fraudulent refunds but can significantly delay processing.
Sometimes, returns are flagged by banking institutions for unusual or suspicious activity. This can happen if there are irregularities in direct deposit information or other red flags. These cases require additional scrutiny by the IRS.
The complexity of the tax situation
Also, if your tax situation is complicated (like owning a business or having multiple income sources), it can take longer for the IRS to review and approve your refund.
Impact of tax credits on refund timing
Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) are designed to help lower-income families. However, due to extra measures to prevent fraud, the IRS takes more time to process returns claiming these credits.
Under the Protecting Americans from Tax Hikes (PATH) Act, the IRS cannot issue refunds for returns claiming EITC or ACTC before mid-February. This means if you claim these credits, you might not see your refund until late February, even if you filed early.
Form 8379: Injured Spouse Allocation
If you filed Form 8379, Injured Spouse Allocation, the processing can be more complex. This form is used when a portion of a refund (overdue taxes, child support, etc.) might be applied to a past debt of the spouse, and the other spouse is seeking relief from such an application. Processing such forms can take up to 14 weeks as it involves ensuring the proper allocation of the refund.
Form 1040NR refunds involving Form 1042-S: For nonresident aliens
If you’re a foreign individual and have filed a Form 1040NR to request a refund for taxes withheld as indicated on Form 1042-S (related to U.S. source income), please note that the processing of your return will take additional time.
Your tax refund could take up to 6 months starting either from the original deadline of your 1040NR return or the actual date you submitted the 1040NR, depending on which of these dates occurs later.
Want to learn about IRS Form 720? Read our detailed guide.
Checking your refund status
We covered how long tax returns take on average and what can affect your wait period for your tax refund. Now, let’s find out how to get information about your personal tax refund status.
The IRS has two online services that help you check that: “Where’s My Refund” which is a web-based solution and the IRS2Go app, which is a mobile application that serves the same purpose as its online version. You can also call the IRS on the automated refund hotline (800-829-1954). However, it can only give you information about the 2023 refund. For earlier years you need to check the online tools.
Want to contact the IRS by phone? Read our article: Live Person to Talk to at the IRS & Telephone Numbers You Should Try.
What is the “Where’s My Refund?” tool?
“Where’s My Refund?” is an online tool provided by the IRS that lets you check the status of your tax refund. It’s like tracking a package online; you get to see where your refund is in the IRS process.
To find out where is your refund, you simply enter some basic information – your Social Security number or ITIN, your filing status (like single, married, etc.), and the exact refund amount you’re expecting. This is the IRS’s way of making sure they’re giving the right information to the right person.
How to use the IRS2Go app for status updates
IRS2Go is a mobile app developed by the IRS, basically a portable version of the “Where’s My Refund?” tool. You can download it for free on your smartphone.
Once you have the app, you’ll input the same information as the “Where’s My Refund?” tool (Social Security number, filing status, and refund amount). The app will then provide you with the status of your refund. It’s handy for checking on the go.
Understanding the information displayed on these platforms
Both the “Where’s My Refund?” tool and the IRS2Go app will typically show your refund in one of three stages:
- Return Received: The IRS has your tax return and is working on processing it.
- Refund Approved: The IRS has finished processing your return and confirmed the refund amount.
- Refund Sent: Your refund is on its way to you either by direct deposit to your bank account or through a mailed check.
Once your refund is approved, these tools will also provide an estimated date for when you can expect to receive your refund. If there are any issues or additional actions you need to take, these platforms will alert you.
Amended returns and their unique processing times
If you made a mistake on your original tax return and filed an amended return (using Form 1040X), this is a separate process. Amended returns are processed manually, which takes more time. It can take up to 16 weeks or even longer in some cases to process an amended return.
Let’s break down the process of checking the status of your amended tax return into simple steps:
Wait for processing
After you’ve filed your Form 1040-X (your amended tax return), you need to wait at least three weeks. This is the time it takes for your amended return to be logged into the IRS system.
Check the status online or by phone
You have two ways to check the status of your amended return:
- Online: Just like with the tool “Where’s My Refund?”, the IRS has a special tool for amended refunds, called “Where’s My Amended Refund?”.
- Phone: Call the IRS at 866-464-2050.
Whether online or on the phone, you’ll need to provide your taxpayer identification number (like your Social Security number), your date of birth, and your ZIP code. This information confirms your identity.
Review the processing stages: “Where’s My Amended Return?”
When you log in to “Where’s My Amended Refund?”, you can check the status of your documents.
Your amended return goes through three stages:
- Received: The IRS has your amended return and has started processing it.
- Adjusted: The IRS is making changes to your tax return.
- Completed: The IRS has finished processing your return and made any necessary adjustments.
Understand the timeline
Normally, it can take up to 16 weeks for an amended return to be processed completely. However, due to delays, it’s currently taking more than 20 weeks.
When to call the IRS
Generally, there’s no need to call the IRS unless it’s been more than three weeks since you filed and you still can’t see the status, or if the online tool tells you to contact them.
After you file your amended tax return, you wait a few weeks, then use the IRS’s online tool or phone number to check where your return is in the processing stages. Remember, it takes quite a while for amended returns to be processed, so patience is key!
Are tax returns for businesses the same as individual tax returns?
The process for filing tax returns for businesses can be significantly different from that for individual taxpayers, primarily due to the different forms required, the information reported, and the various types of taxes that businesses may need to pay.
The tax return process for a business depends on the type of entity it forms. These types include sole proprietorships, partnerships, C corporations, S corporations, and limited liability companies (LLCs).
What is a pass-through taxation?
Pass-through taxation is a tax structure used by certain business entities where the income generated by the business is not taxed at the business level but is instead “passed through” to the individual owners or shareholders. These individuals then report the income on their personal tax returns.
Entities that can use pass-through taxation
Here are the entities that use pass-through taxation or can elect to do so:
- Sole Proprietorships and Partnerships automatically use pass-through taxation. The business income directly affects the business owner’s or partners’ personal tax returns.
- Limited Liability Companies (LLCs) have the flexibility to choose how they are taxed. By default, single-member LLCs are treated as sole proprietorships, and multi-member LLCs are treated as partnerships, both of which use pass-through taxation. However, an LLC can elect to be taxed as a C corporation or an S corporation, affecting its tax treatment.
- S Corporations are corporations that elect to pass corporate income, losses, credits, and deductions to their shareholders for federal tax purposes. To be classified as an S corporation, a corporation must meet specific IRS requirements and make a valid election on Form 2553.
How does the type of entity affect the tax refund process?
Owners, partners, and shareholders of pass-through entities such as sole proprietorships, partnerships, S corporations, and LLCs treated as pass-through entities for tax purposes will report their share of the business’s income, deductions, credits, and losses on their personal income tax returns. So the process to check the status of a tax refund for these individuals essentially remains the same as for any taxpayer expecting a personal income tax refund. They can use the IRS’s “Where’s My Refund?” tool or the IRS2Go mobile app.
Navigating the complexities of business tax preparation starts with precise bookkeeping. Synder is here to ensure that every transaction is accurately recorded, making your tax filing process smoother and more efficient.
If your tax refund got approved, how long after will you get your money?
So you’ve got the confirmation on the approval of your tax refund. Great news! Now you’re probably wondering, how long should it take for your money to arrive in your bank account or post (as a paper check).
How choosing direct deposit can affect refund timing?
If you choose to have your tax refund sent to you via direct deposit, this should speed up the process. Direct deposit is a payment method and it looks just like getting a paycheck deposited directly into your bank account. It’s fast and secure. If you choose direct deposit when you file your tax return, the IRS will send your refund straight to your bank account.
Direct deposit is the quickest way to get your refund. Once the IRS processes your return and approves your refund, the money can be in your bank account within a few days.
What happens if you choose postal mail?
If your tax refund has been approved and the IRS is sending your refund via postal mail (as a paper check), the time it takes to actually receive the check can vary. Generally, once the refund is approved, you can expect the following:
The IRS will first need to print the check and then mail it out. This process can take a few days to a week, depending on the volume of refunds being processed.
After the check is mailed, the time it takes to reach you depends on the postal service. Typically, it might take anywhere from a few days to a couple of weeks for the check to arrive in your mailbox.
Altogether, from the time your refund status changes to “approved” to when you receive the check, it can generally take from about a week to several weeks. However, this is an estimate and can be influenced by factors such as postal delays, the efficiency of the check processing system at the IRS, and the distance between the IRS processing center and your address.
Circumstances under which the IRS might send a paper check
If there’s an error with your bank account details (like a wrong account number), the IRS can’t deposit the money and will instead send a paper check. Sometimes banks reject direct deposits for various reasons (like the name on the tax return not matching the bank account). In such cases, the IRS will mail a paper check.
The IRS limits the number of direct deposits into a single account or prepaid debit card to three refunds per year. If you exceed this limit, you’ll get a paper check. In rare cases, the IRS might choose to send a paper check for other reasons, even if you requested direct deposit.
What to do if your refund is delayed?
If you think your refund should be coming to you but there have been some delays, here is what you can do to effectively resolve the situation.
Check the status of your application
Use the IRS “Where’s My Refund?” tool or the IRS2Go app. This should be your first step to see if there are any updates or issues noted. Ensure that all the information you submit is correct. Sometimes, simple mistakes can cause delays. The IRS typically suggests waiting 21 days when you file electronically and up to 6 weeks for paper filings before taking further action.
Contact the IRS
If it’s been more than 21 days since you e-filed, or more than 6 weeks since you mailed your paper return, and the “Where’s My Refund?” tool doesn’t provide a status, then it’s time to call. The IRS provides a toll-free automated hotline (800-829-1954). Be prepared with your Social Security number, tax filing status, and the exact refund amount.
Understand IRS notices and letters regarding refund adjustments
Sometimes, the IRS will send you a letter or notice if they made changes to your tax return, affecting your refund. These notices will explain why your refund is different, such as due to math errors or unreported income. If you agree with the changes, you usually don’t need to do anything. If you disagree, follow the instructions in the notice to contest the adjustments.
Common misconceptions about refund timing: Debunking myths related to tax refund processing
There are several misconceptions about how quickly tax refunds are processed.
Myth 1: Refunds always arrive in 21 days or less.
While the IRS aims to process most refunds within 21 days, especially for e-filed returns, this isn’t guaranteed. Delays can happen due to errors, the need for additional review, or specific claims like EITC or ACTC.
Myth 2: Calling the IRS will speed up my refund.
Unfortunately, calling the IRS won’t expedite your refund. The IRS processes returns in the order they receive them.
Myth 3: If I file on the first day of tax season, I’ll get my refund faster.
When you file early, it does get your return in the queue sooner, but it doesn’t always mean a faster refund, especially if your return involves credits that require additional review.
Importance of accurate filing to ensure timely refunds
The key to a timely refund is accurate and complete filing, and understanding that various factors, like additional reviews for certain tax credits, can impact processing times. Patience is important, and remember, checking the status of your refund is easy through the IRS’s tools.
Errors on your tax return are one of the main reasons for delays in processing your refund. This includes incorrect income reporting, wrong social security numbers, or mathematical mistakes.
Double-check your return
Before submitting your return, review it thoroughly. Make sure all the information is correct and complete. This reduces the chances of the IRS needing to reach out for clarifications or corrections.
Use reliable tax preparation methods
Consider using trusted tax software or a professional tax preparer. These methods often include error checks and guidance to ensure accuracy.
Navigating the IRS tax refund process is all about understanding the steps involved and the factors that can affect your refund timing. By ensuring accurate and complete filing, choosing efficient methods like e-filing and direct deposit, and being aware of the common pitfalls, you can make the process much smoother.
Remember to use the tools at your disposal, like “Where’s My Refund?” and the IRS2Go app, to keep track of your refund status. Patience and attention to detail are key. With the information provided in this guide, you are now better equipped to handle your tax filing and understand what to expect throughout the process. Here’s to a successful and hassle-free tax season!
Want to learn more? Find out about the average cost of tax preparation by CPA. Read our guide: Navigating CPAs Fees for Personal & Business Taxes.
This article has been prepared for informational purposes only and gives a general overview of the IRS tax refund process. It’s not intended to provide any tax advice. It’s highly recommended to consult with a tax professional to ensure that taxes are properly calculated and reported.