How Long Does It Take To Get Your Tax Refund?

Introduction to Tax Refunds

Tax refunds are handed out to people who have overpaid they owe, and by the end of the year the difference is paid back to them.

When a person is eligible for their tax refund, they can receive it in the form of a check, bond, or a direct cash deposit to their account. There may also be other options for refunding the taxpayer, but these are the most common ones.

Like it has been mentioned, tax refunds are given to people that have overpaid the amount they owe in a certain year. There are certain ways why that is possible and would work. According to Investopedia, here are the reasons why people get their tax refunds.

• The taxpayer has made an error in filling out Internal Revenue Service (IRS) Form W-4, which is used to estimate the correct amount to be withheld for taxes from the employee’s paycheck.
• The taxpayer has forgotten to update this form to reflect a change of circumstances, such as the birth of a child and, therefore, an additional Child Tax Credit Allowance.
• The taxpayer was eligible for refundable tax credits, which reduces the amount owed. Most tax credits are not refundable.
• A freelancer or self-employed person who has to file quarterly estimated taxes may over-pay before going through the laborious task of documenting deductible expenses.

How long does a Tax Refund take?

When people know that they’re eligible for a tax refund, no matter how big or small the amount is, they want the amount immediately. And while that isn’t possible in such a short period of time, often people wonder as to how long does it take to get your tax refund?

On average a transaction may take somewhere between six to eight weeks for the application processing and the money finally getting into your account. And this is if you’re filing through conventional methods like manually going through the office or sending a fax

The process may also take 21 days for you to get your tax refund if you’re applying electronically via email or an online application.

For tax year 2019 (taxes filed in 2020) the IRS started accepting returns on January 27th, 2020. We’ve based these timelines on historical data noting that most refunds will be issued by the IRS in less than 21 days after the return has been accepted.

The financial condition in 2020 has been greatly affected by the pandemic, and there is absolutely no secret to it. While financial institutions have been shut down or negatively affected, the inefficiencies of the IRS have surfaced.

This means that the tax refund process has become slower.

How long does it take for a Tax Refund to show in a Bank Account?

The whole situation of having your application submitted and processed takes about 21 days if submitted electronically, or 6 to 8 weeks- this is how long it takes to get your tax refund. Once the process is complete, it shouldn’t take long for the amount to show up in your bank account.

Ideally, the tax refund delivery timeline is as such:

Note: Sample rates have been extracted online, courtesy of IRS.

Considering trends from last year and this year, there is a predicted schedule about how long it will take for tax refunds in 2021.

If you want a more accurate look at when you might get your tax return in 2021, check this table, based on past years and our best estimates.

Note: Sample rates have been extracted online, courtesy of BankRate.

How long does it take to get a Tax Refund from Turbotax Direct Deposit?

The IRS states that nine out of 10 e-filed tax returns with direct deposit will be processed within 21 days of IRS e-file acceptance. Mailed paper returns: If you filed a paper return, please allow 4 weeks before checking the status. Refund processing time is 6 to 8 weeks from the date the IRS receives your tax return.

Intuit TurboTax’s refund advance loan is funded by First Century Bank.

Minimum federal tax refund amount: $500, but a higher refund amount makes you eligible for higher loan amounts.

Loan amounts: $250, $500, $750, $1,000, $1,500 or $2,000.

Time to funding: Within an hour of approval for the tax refund loan, you’ll get an email with instructions to set up a Turbo Card account so you can shop online. You’ll receive a physical card in the mail within five to 10 business days.

Keep the debit card, because TurboTax will load your remaining refund onto it when it arrives.

Requirements: There are a handful of requirements to be eligible for the TurboTax refund advance. Here are some of them:

• You must file your taxes with TurboTax.
• You can’t file an Illinois, North Carolina, Rhode Island or Vermont state tax return.
• You must also be approved for the Turbo Visa Debit Card.

Tax preparation fees: TurboTax online products vary from free to $120.

Deadline: The refund advance loan is available until Feb. 8, 2021, or until funds are exhausted.

You will receive a notification from TurboTax (email or text, depending on what you chose when preparing your taxes through the TurboTax software). As for direct deposits, it will generally take your financial institution 1-2 business days before the money is made available to you.

Tax Refund Status

Once you’ve applied for your tax refund, you must know that your job is far from done. This means until you get the money into your account, you need to check the status of your tax refund if the process is being delayed.

The best and the more authentic way of going about it is using the IRS online tool, which you can access as soon as 24 hours after you e-file your tax return (or four weeks after mailing your paper return).

You’ll need the following information to check the status of your refund online:

• Social Security number or ITIN (Individual Taxpayer Identification Number).
• Filing status (e.g., single, married filing jointly, married filing separately, head of household, etc.).
• Exact amount of the refund listed on your tax return.

Once you input the required data, you’ll encounter one of three status settings.

1. Return Received: The IRS has your tax return and is processing it.
2. Refund Approved: The IRS has finished processing your return and your tax refund is being prepared. Once ready, the IRS will send your funds to your bank (if you opted for direct deposit) or mail them to you directly.
3. Refund Sent: The IRS has electronically submitted the refund to your bank or your check is in the mail.

The IRS updates refund status once a day, usually overnight.

Reasons your Tax Refund might be delayed:

Despite the fact that you’re most likely anxious to get your refund, it may take longer than 21 days for the IRS to deposit the amount. A few issues may cause a postponement, including:

• Your tax return incorporates errors.
• The tax return you submitted is deficient.
• You’re a victim of identity fraud or misrepresentation.
• You’re guaranteeing the Earned Income Tax Credit or Additional Child Tax Credit.
• You presented a Form 8379, an Injured Spouse Allocation, which could take the IRS as long as 14 weeks to process.
• The tax return requires further survey.

Can I take a Loan against my Tax Refund?

Yes, you can take a loan against your tax refund. But you have to decide whether it is the best choice or not.

Sometimes it takes a lot of time waiting for your tax refund, no matter how much it is, there is a certain time period you have to kill before you claim the amount. But if you have an emergency and you need the money, you can ask for cash advance on your income tax return.

But you might be getting yourself into an expensive ‘loan,’ and you may end up paying for services you don’t really need. If you file your taxes electronically and use direct deposit for your refund, you should get your money within 21 days or so.

Here is a list of pros and cons to really help you decide on what you should do.

Pros:

• Great option if you’re looking to pay off a high interest debt. Waiting for the loan can be a good time period to get your debt off your back.
• Even if you have a fair credit score you’re able to qualify. Since tax refund loans do not work like traditional loans, there is a chance for you to qualify even if you don’t have a very high credit rating.

Cons:

• Traditional tax refund advance loans are high-interest debts because they often require high origination fees or other charges. Because the loans are held for such a short amount of time (less than two months), the real interest rate (called the annual percentage rate) could be in excess of 100%.
• The interest on the loans may be calculated as a set fee rather than a traditional percentage thus making the overall process super complicated. It could take you a lot of time trying to figure out the technicalities and gathering documents, and there is also a high chance of human errors.
• This loan won’t help you build credit because most lenders won’t bother to report your tax refund loan to the major credit reporting bureaus. So if you’re thinking maybe this is a good way for you to improve your score, sorry to burst your bubble, but that’s not going to happen. All of your effort may be for nothing.

These sets of pros and cons are real and happen very much so in the world of tax refunds. While the pros are there, the risks of getting a loan against your tax refund is also very real. So before you jump on the bandwagon make sure you’ve properly evaluated everything.

You recorded a paper return, which could bring about handling delays because of restricted staffing.

Can I get my Tax Refund immediately?

Not neglecting the current scenario of the pandemic which has really taken a toll on the world’s trade and transactions, the tax refund process has gotten a lot slower. While it may not be possible to get your tax refund immediately, there are ways to have it happen early.

While these ways may not surely work, there is a fair chance if you’re lucky enough.

First come first serve basis is a global phenomenon, and well, this concept works fairly in financial institutions of the country too. If you’re quick enough in applying for the tax refund, you may well be given a chance to get in the front line.

The IRS gets an avalanche of late-filed returns in the month before the deadline, usually April 15. The backup delays processing, and refunds, by weeks. File early!

Another option is to file online. It is seen that online applications are processed quicker because of automated software solutions and applications are reviewed faster too. This will help the taxpayer avoid long queues, time to get in the application manually and also saves them from the inefficiencies of manually handling applications.

The IRS mentions a minimum of 21 days in each scenario, and this is the earliest that you can get your tax refund. If you’re expecting to get it ‘immediately’ or earlier than 21 days, you’re in for disappointment.

What can I do with my Tax Refund?

Once your tax refund application is through and the money is safely deposited in your bank account, there are some ways you could utilize your tax refund for better use.

Savings Account

If you’ve recently just gotten your tax refund and if you’re thinking what to do with it, you can use this money to set up a foundation for your savings account. Start somewhere, and this could be your way to go. You could maintain this account over time and actually use cash when you really need it.

Pay off your Debt

Everyone has some form of debt hanging on their shoulders at ALL times. Whether it be mortgage, student loans or even a small personal loan borrowed from a friend, you need to pay if off. And what better way to utilize your cash refund than paying off previous debts to earn a peaceful night’s sleep for once.

Invest in the Stock Market

Historically, the stock market has offered greater return on investment than savings accounts, CDs or bonds. While its fluctuations make it a risky choice for money you’ll likely need in the coming months, the long-term outlook makes it a better option if you don’t have an immediate financial need. Pick individual stocks or select an index fund that moves up and down along with the market.

Travel

While this may sound like a luxury, traveling is really a need. Most people spend all their lives trying to earn money and a good lifestyle for their family, and they often forget how important a once-in-a-while vacation is. Even if it isn’t traveling to some expensive country, you could really use a weekend getaway to a quiet place and relax for a few days. Some part of your tax refund could go to traveling and actually making good use of the money that you’re earning!

Start-up Capital

If you’ve been looking to start up your small scale venture and have been requiring some cash upfront, you could use your tax refund to the cause. You could use the money to get inventory, purchase office equipment or rent out office space, or get things to start up the business.

Improve your Home

Most people have houses they’ve been living in for years and generations, and now the house requires renovation and wear and tear. You could use your tax refund money to pay for paint, plumbing, redoing your garden or renovating the house as a whole, depending on how much cash you’re able to score.

Cash Advance on Income Tax Refund

While citizens normally forfeit their tax credits when they don’t owe anything, you may meet all requirements for a tax refund through these exemptions:

The Child Tax Credit pays a limit of $2,000 for each child that qualifies as a dependent. Taxpayers can get up to $1,400 of that most extreme sum discounted, which implies that you can utilize it to cover off your tax bill and get a discount on any cash left finished.

Taxpayers who procure low-to-direct pay may meet all requirements for the Earned Income Tax Credit (EITC or EIC), which diminishes the tax amount that you owe and could qualify you for a refund.

The American Opportunity Tax Credit (AOTC) helps eligible students offset higher education costs with a maximum annual credit of $2,500. You can get 40% or the left over credit refunded, up to $1,000.

Conclusion

Tax refunds are not much, but they are surely a common practice. When people overpay than what they owe, their remaining tax amount is refunded to them by the end of the year. And while the most common way to refund is direct deposit or cash checks, there may also be other ways.

Ideally, it takes 21 days minimum to get your tax refund if you’re applying electronically. And it takes 6 to 8 weeks if you’re applying through traditional methods. Once you’re done submitting the application, it is processed by the system and the tax refund amount is sent into your bank account.

While we may want all of this to happen immediately, it’s not possible, especially after the pandemic that has slowed down operations of all financial institutions. Even the quickest application that will get processed will take a minimum of 2 to 3 weeks.

Within this time frame, the application is expected to be submitted, processed and the amount showing up in your bank account. However, the process could experience week long delays if there is inaccuracy in the information or any such errors that need to be resolved beforehand. So to avoid this, make sure that you have all valid and authentic documents before you’re claiming a tax refund, and when you do, don’t forget to check the status of your application online through the tracker tool on the IRS website.