If you're expecting a refund this tax season, you may already have a very good idea of how you're going to spend it. Before you make any definitive plans with your minor windfall, though, understand that you may be receiving it later than you think. And while you shouldn't panic if this happens, you may want to retrace your filing steps.
A contingent of taxpayers experience disappointment each year when Uncle Sam doesn't deliver as quickly as anticipated. The reasons for this delay can range from innocuous to alarming. Think about some common causes for belated refund payments and how they might apply to your filing experience this year.
One excellent reason to exercise caution when handling tax return details involving your name, bank account, Social Security number or address is that errors can lead to refund delays. For example, if you indicate the wrong checking account number on your return, any payment you're due might wind up going nowhere - or into a stranger's account. Correcting such an issue can be time and patience consuming, so make sure to double-check everything on your tax return.
You might be subject to a penalty if you did not have a qualified health insurance plan last year. The good news is that the IRS cannot take typical collection action, such as a wage or bank levy, if you don't pay the penalty. They can, however, subtract what's due from your refund. If you had any gaps in your health coverage, you might get your refund on time...but don't expect it to be completely intact.
An unfortunate byproduct of modern conveniences such as online filing is the ever growing presence of tax scams. Case in point, more and more taxpayers have been falling victim to identity theft. A typical scenario involves a scammer filing a false return using your personal information and then claiming the refund before you have a chance to file. You'll only find out that you've been victimized once you attempt to file and receive notice that a return has already been submitted. If this happens to you, you can expect refund delays of six months or more as you iron the issue out.
A frequent and oft misunderstood reason behind a missing refund comes when certain debts go unpaid. If you have a delinquent government loan for higher education, for instance, your refund isn't late; it's been taken. Any money you're due back from a tax return is rerouted, or offset, to satisfy such a balance. Similarly, any IRS debt will prevent you from getting a refund, up to the total amount that is outstanding. In other words, if you owe $2000 for an old liability and you're expecting $1200 for a refund, you won't see a dime and you'll still owe $800.
It's entirely possible that your tax refund is delayed because of an IRS backlog or just bad luck. If months pass without seeing your payment, though, you might want to inquire about the reason for the delay. Alternatively, you may be aware of an existing problem which is preventing you from getting your refund. If this is the case, you may want to contact a licensed tax professional to learn about your resolution options. That way, you may at least be able to salvage next year's refund and avoid any unpleasant surprises.