5 Common Myths About Tax Refunds
Now that the April 15th tax deadline has come and gone, we understand taxpayers are anxious to get details about their tax refunds. Unfortunately, this often leads to a number of common myths and misinformation about refunds that circulate in the news and on social media.
While there’s no secret way for taxpayers to find out when their refund will be issued, there are some key facts that can help people understand the refund process. Taxpayers should keep in mind, the Internal Revenue Service (IRS) issues 9 out of 10 tax refunds in less than 21 days. And the easiest way to check on a refund is by using “Where’s My Refund?,” an online tool available on IRS.gov and through the IRS2Go app.
Taxpayers should only call the IRS tax help hotline to talk to a representative if one or more of the following applies:
It’s been 21 days or more since their tax return was e-filed
It’s been six weeks or more since their return was mailed
“Where’s My Refund?” tells the taxpayer to contact the IRS
That being said, let’s review the five most common myths we run into each year.
MYTH #1: Calling the IRS or a tax professional will provide a better refund date
Many people mistakenly think that talking to the IRS or calling their tax professional is the best way to find out when they will get their tax refund. In reality, the best way to check the status of a refund is online through the “Where’s My Refund?”. Alternatively, those without Internet access can reach “Where’s My Refund?” by calling the automated refund hotline at 800-829-1954.
MYTH #2: Ordering a tax transcript is a ‘secret way’ to get a refund date
Ordering a tax transcript will not help taxpayers find out when they will get their tax refund. While taxpayers can use a transcript to validate past income and tax filing status for mortgage, student and small business loan applications, or to help with tax preparation, they should use “Where’s My Refund?” to check the status of their refund.
MYTH #3: ‘Where’s My Refund?’ must be wrong because there’s no deposit date yet
Updates to “Where's My Refund?” on both IRS.gov and the IRS2Go mobile app are made once each day – usually overnight. Even though the IRS issues most refunds in less than 21 days, it’s possible a refund may take longer for a variety of reasons, including when a return is incomplete or needs further review.
This means that in some cases, a taxpayer who filed later may receive their refund sooner than someone who filed earlier in the season. The IRS will contact taxpayers by mail when it needs more information to process their tax return. Also, remember to consider the time it takes for financial institutions to post the refund to the taxpayer’s account or to receive a check in the mail.
MYTH #4: ‘Where’s My Refund?’ must be wrong because a refund amount Is less than expected
There are several factors that could cause a tax refund to be larger or smaller than expected.
Situations that could decrease a refund include:
Math errors or mistakes
Delinquent federal taxes
State taxes, child support, student loans or other delinquent federal non-tax obligations
IRS holds a portion of the refund while it reviews an item claimed on the return
The IRS will mail the taxpayer a letter of explanation if these adjustments are made. Some taxpayers may also receive a letter from the Department of Treasury's Bureau of the Fiscal Service if all or part of their refund was reduced and offset to pay certain financial obligations.
MYTH #5: Getting a refund this year means there’s no need to adjust withholding for 2019
Annual tax planning should be done by everyone! To help avoid an unexpected tax outcome next year, taxpayers should make changes now to prepare for when they file 2019 tax returns. This can mean adjusting tax withholding with their employer or increasing estimated or additional tax payments.
Checking withholding is important every year, and the IRS encourages people to do a Paycheck Checkup. This is especially important for anyone who got an unexpected result from filing their tax return this year because they had too much or too little withheld from their paycheck in 2018.
Use the IRS Withholding Calculator to determine whether the right amount is being withheld. If an adjustment is needed, taxpayers should submit a 2019 Form W-4, Employee’s Withholding Allowance Certificate, to their employer as soon as possible.
If you have any questions about your refund or would like help with tax planning for next year, please CONTACT US right away. We’re here to help!