When you filed your income tax returns for the past tax year, your tax preparer or the software program you were using probably gave an estimate of how much money you would receive back from the government. You were likely very excited to receive your tax refund. You may have planned precisely how you were going to spend it.
Then your refund check arrived. It was a different amount than what you expected – much less. A few weeks later, another check arrived that contained the rest of the money that you were expecting. Why did this happen?
To answer this, you have to understand that you may be getting your refund checks from two different places. The Internal Revenue Service may send you one and your state tax department. Often, if you are receiving two separate refund checks. It is because the IRS and your state tax department work on entirely different timelines.
Federal Government Tax System
The Internal Revenue Service is responsible for collecting taxes on behalf of the United States Federal Government.
For most Americans, the filing and payment deadline to submit federal tax returns is April 15 of the following year. If April 15 falls on a weekend or holiday, then the deadline is moved until the next business day.
The IRS issues most federal tax refunds within 21 calendar days of receiving a correctly filed tax return if you filed electronically. However, the IRS will take a lot longer if you filed a paper return.
State Tax System
Each state has its laws and procedures regarding state income taxes. Some states, like Alaska, Florida, Nevada, and Texas do not collect state income tax. For the U.S. states that do collect income tax, the filing due date varies. While many states use the same date that federal tax returns are due, others set dates that ranged from April 17 to May 15 this year. Each state then processes its tax refunds according to its timeline.
Where’s My Refund?
What if your income tax refund doesn’t come in the time that you expect it?
Once you’ve filed your federal tax return, you can use the “Where’s My Refund” tool on the IRS website to check on the status of your tax refund. If you e-filed your return, you can begin checking on the status within 24 hours from when the IRS receives your e-filed return. If you file via paper IRS forms, you can start checking on it about four weeks after you mail in your tax return. Most state tax departments have a similar refund status check tools on their websites.
The IRS may delay your tax refund if you claim earned income tax credit or additional child tax credit. Additionally, the IRS will take longer to process a return that is filed by paper or if you ask for a paper refund check instead of using the option to have your refund sent via direct deposit to your bank account.
To expedite receiving your refund, the IRS recommends that you:
- Double-check for errors. Any error on the tax return can slow the processing. Ensure that you have your name, address, and social security correct on your forms. Check your math. If you are using direct deposit, ensure that you’ve written the exact routing number for your financial institution and correct account number for your savings or checking account that you’d like your refund deposit(s).
- E-file your tax return for faster processing. The IRS will take up to four weeks acknowledge that they have received your paper return and then begin to process it. If you file electronically, the IRS will often confirm that it has received it within 24 hours.
- Use direct deposit. If you request that the IRS pay you by direct deposit, it will issue your return much faster. They will issue it much faster than if you ask for a paper check. However, if you choose to receive your return by direct deposit, you must ensure that you give the IRS your correct account information.
You should also be aware that you can split your federal tax refund into up to three different accounts. By filling out IRS Form 8888, you can instruct the IRS to deposit your refund into a retirement account, savings account, health savings account, or brokerage account. You can also notify the IRS to send your tax refund in the form of a paper check or up to $5,000 worth of savings bonds. Some states offer a similar service.
Speak With a Tax Professional
If you have any questions about filing your tax return or splitting your refund up into different accounts, it’s a good idea to speak to a licensed tax professional. They can walk you through the process.