Update February 4, 2013 – The IRS has announced that many refunds which include Earned Income Credit have been delayed because tax preparers are not correctly completing Form 8867 Paid Preparer’s Earned Income Checklist. If your refund includes Earned Income Credit have a look at your copy of Form 8867. If any of lines 22, 23, 24, 25 and both parts of 26 and 27 have not been completed there is a chance that your refund will be delayed. Although Form 8867 was updated for 2012 and new parts added to it such as lines 26 and 27, competent and up to date tax preparers should have known about these changes.
Update January 9, 2013 – This article has been updated to reflect the further delay in the filing season start date announced by the IRS. Read more about this in our article published January 9, 2013.
If you are expecting a tax refund this tax season, budget for receiving it later this year than in the past.
Firstly, e-filing for 2012 income tax returns does not start until January 30, 2013. This is about two weeks later than normal. You could mail in your tax return but the IRS will not process the return until January 30. In addition you will wait at least 4 weeks for the refund.
E-filing your tax return is usually the best way to go as it is a more secure way of filing your tax return. It is also less prone to errors and will usually get you your refund faster than mailing in the return.
Another reason why tax refunds might be delayed for some taxpayers is tax fraud. The IRS is increasingly taking a close look at certain refunds and reviewing them before they issue the refund. This particularly applies to Earned Income Credit claims. This is a very useful credit for working families with children. It is a refundable credit meaning that you get the credit even if you have no income tax to pay. However, there is a high incidence of erroneous claims due to misunderstanding of the rules or just plain fraudulent claims. So, if you have a large Earned Income Credit claim or are not using your own children for the claim then the IRS may review your refund before issuing it to you.
For this tax season the IRS has an improved Where’s My Refund tool. You can access this tool from IRS.gov or using the IRS2Go phone app. For the 2013 tax season the IRS expects to issue 9 out of 10 refunds in less than 21 days.
The improved Where’s My Refund tool will now give you an actual personalized refund date once the IRS has received and approved your refund. The tool will also show you the status of the return i.e. received, refund approved and refund sent.
You can access the tool 24 hours after a return has been e-filed or 4 weeks after you mail in a return.
Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.