One of the few silver linings of tax season is the potential to get a tax refund, which can be a much-welcomed infusion of cash that can be used to pay off debt, replenish savings or reach other financial goals. In a recent study of the tax period from 2013 to 2017, we found 77% of taxpayers in the largest 100 metros received a tax refund and the average refund was $3,016.
If you’re wondering how long it will take for your tax refund to hit your bank account, the answer is fairly straightforward.
- If you e-file and choose to have your refund deposited directly, the majority of taxpayers receive their refunds within 21 days of submitting their returns to the IRS, according to the agency.
- If you choose to file your taxes by mail, it can take six to eight weeks to receive your tax refund.
But the method you use to file your taxes isn’t the only factor that determines when that cash will hit your bank account. Read on to discover how you need to do your taxes this year to get your refund as quickly as possible.
How to get your tax refund quickly
The speed with which you’ll receive your tax refund largely depends on three choices you made when filing your taxes: how you file your returns, how you request to receive your refund and what credits you claim.
Choose e-file for the quickest tax refund
Although some 88% of taxpayers last year filed online, some Americans prefer filling out their tax returns on paper and sending them to the IRS via mail. Since the government can’t begin working on your refund until it receives your return, it’s in your best interest to make sure Uncle Sam gets the paperwork as soon as possible.
Depending on how you choose to receive your return (more on that below), filing your returns via mail will have you waiting six to eight weeks for your returns. You can cut that timeline in half by e-filing.
Filing your taxes electronically doesn’t necessitate purchasing a tax-preparation software. If your income is $66,000 or below, the IRS offers its own tax-prep software for free, and if you earn more, the government still offers electronic versions of all the forms you need. Simply fill them out yourself and file electronically (more info can be found in the IRS’s guide).
Check out our round-up of the Best Tax Software in 2019 here, which has a handy list of free options, as well as recommendations for small business owners and the self-employed.
Choose to receive your refund via direct deposit
If the IRS has to mail your refund check to you, it could take more than a month to reach you.
The IRS encourages filers to request their tax refund via direct deposit into a bank account in order to minimize the wait time.
If you e-file and choose direct deposit, you will likely get your refund within that 21-day window. However, it may take up to five additional days for your bank to deposit that money in your account(s).
You can give the IRS the account and routing number for up to three accounts when you file (or when prompted by tax preparation software), and the IRS will provide your refund to your bank.
Reasons your tax refund might be delayed
There were errors in your tax return
When it comes to filling out your returns, little mistakes can lead to major delays. Misspelling names, inputting the wrong social security number or choosing the wrong filing status are all examples of errors that can cause the IRS to delay processing your return, which in turn delays your refund. If this happens, you’ll likely get a call from the IRS asking for the correct information.
Of course one of the easiest places for an error to occur is with your math, particularly if you are filling out your returns without the aid of tax software or a tax professional. If you majored in comparative literature and don’t engage in any math more complicated than calculating the tip, you may want to double (and then triple) check your calculations.
Your direct deposit information was incorrect
To avoid any delays in processing your tax refund, you need to make sure the direct deposit account is either in your name, your spouse’s name or a joint account shared between you. Also be sure the account and routing numbers are correct, otherwise you’ll have to wait for the IRS to be alerted that an error exists and then mail you the refund by paper check—a delay that can take several weeks.
You claimed certain tax credits
If you haven’t received your refund in your bank account and wonder what’s the holdup, it could be because you claimed either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC).
Because of the Protecting Americans from Tax Hikes (PATH) Act, the IRS can’t issue refunds to anyone who claimed either of these credits before the middle of February 2019. The earliest the agency expects anyone claiming these credits will see their refunds in their bank accounts is Feb. 27, 2019, meaning early filers this year may have to wait longer than usually to get their refund.
The Earned Income Tax Credit helps those earning low-to-moderate incomes with a tax credit. For the 2018 tax year, a single person without any qualifying children who earns $15,270 a year or less qualifies for the EITC. More info on qualifications can be found here.
The Additional Child Tax Credit is a credit claimed by taxpayers with qualifying children as their dependents. Typically, the child has to be under the age of 17 at the end of the tax year and live in your household. Under the Tax Cuts and Jobs Act, taxpayers can claim up to $2,000 for each qualifying child. More information about who qualifies can be found here.
Blame the government shutdown? Not so fast.
With the recent government shutdown, federal agencies like the IRS were hamstrung for more than a month, leading some to worry that the agency would be slower to process returns in 2019. In reality, the impact to tax refund processing should be minimal, the agency says.
The IRS announced at the end of the shutdown that it “will issue refunds as soon as possible and expects many early refunds to be paid in mid- to late February like previous years,” and so far there aren’t any reports of widespread delays. “We haven’t seen anything yet either way,” said James J. Burns, CFP and president of JJ Burns & Company based in Melville, N.Y. “Most people haven’t filed their returns yet.”
How to check the status of your tax refund
The IRS has helpfully provided an online tool, “Where’s My Refund?” that allows you to check your refund status. You can use this tool within 24 hours after IRS receives your electronically-filed returns (or four weeks after you mailed a paper return). Simply provide your social security number (or individual taxpayer identification number), filing status (single, married, etc.) and the exact refund amount, and the tool will give you one of three status updates:
- Return Received
- Refund Approved
- Refund Sent
As soon as your refund clears the “Refund Approved” stage, the IRS should give you a date on when it will issue your refund.
Where should you save your tax refund?
To maximize your refund’s earning power, make sure you’ve got a savings account that earns a competitive interest rate. Here are a couple of great savings accounts available today.
Minimum Balance to Earn APY
“It’s going to be different for everybody, depending on what their priorities are,” said Joy Liu, financial advisor at The Financial Gym in New York, NY. Liu advocates splitting the refund between paying down any high-interest debt you’re currently carrying and saving it in an online high-yield savings account you can tap in case of emergencies. “It’s going to return a higher yield than traditional banks can offer, so their money starts to make money,” she said.
Liu recommends saving three to six months’ worth of expenses in this account, which you can rely on when the furnace dies in the middle of a polar vortex and you need to pay for repairs or a replacement immediately.
If you feel you have enough money squirreled away to cover emergencies and don’t have any immediate pressing needs for cash, there’s always saving for the future. Putting the money into a Roth or traditional IRA can help you get a jump start on maximizing your contribution for the year, which is like giving the gift of not having to flip burgers to your future self.
The bottom line on your tax refund
If you want to make sure your tax refund gets to your bank account as quickly as possible, make sure to file return electronically and ask to receive your refund via direct deposit. You should receive your refund within 21 days after filing. Once you receive your refund, consider investing in your future by saving the money in a high-yield savings account offered by an online bank and congratulate yourself on surviving another tax season.
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