The majority of people who file taxes end up getting money back from the IRS. And for many, those tax refunds are a financial lifeline.
The average tax refund for the 2023 filing season was $2,812. That’s not a small amount of money. And it’s easy to see why having to wait on a lump sum like that might create a financial crunch.
The good news is that the IRS is working on plans to expedite the process of issuing refunds. And that could make it so millions of taxpayers are able to receive their money sooner.
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Why the process of issuing tax refunds can be slow
The IRS says that 90% of the refunds it issues are sent out in 21 days or less. But there are different factors that can hold up a refund.
One is human error. The IRS might need time to investigate and attempt to rectify a mistake on a tax return, resulting in a delay.
But also, while most taxpayers file their returns electronically, there are those who still prefer the old school method of filing on paper. Those paper returns need to be processed manually, leading to delays.
Similarly, it’s often the case that the IRS will notify taxpayers by mail that it needs supporting documentation to finish processing their returns. Tax-filers in that situation generally have to mail such documentation back to the agency. The result? A lengthy process that keeps people waiting for their money.
But having to wait longer than 21 days for a refund is problematic for people living paycheck to paycheck with no money in their savings account. A taxpayer who’s forced to sit tight for six weeks to receive a payment in the ballpark of $2,800 might end up having to rack up temporary debt to cover their expenses until that money comes in. So the fact that the IRS is taking steps to speed up the refund process is a good thing.
Using technology for faster turnarounds
The IRS is taking steps to digitize the tax-filing process. Beginning next year, taxpayers will have the option to digitally upload documents needed to support their tax returns instead of being forced to send them in by mail. This change should enable up to 125 million paper documents to be filed online every year.
Furthermore, by the 2025 filing season, the IRS expects to be able to digitally process all paper returns. An estimated 76 million returns could then be in line for faster processing and review.
The best way to get your tax refund quickly
It’s a great thing that the IRS is rolling out changes to expedite the process of issuing refunds. But if you’re eager to get your 2023 tax refund as quickly as possible, make sure to file this year’s return electronically, and do your very best to avoid errors. A simple blunder like entering the wrong Social Security number could result in a weeks-long delay in your refund that hurts you financially.
Also, one benefit of filing electronically is that the software you use will do a lot of your calculations for you, thereby reducing the chances of a human math error. But tax software can’t overcome incorrect inputs.
So if your W-2 summarizing your annual wages shows that you earned $45,700, but you put in that you earned $47,500, your return will be off. And your refund could get delayed as a result.
Before you submit your tax return, take a few minutes to do some proofreading. And if you have a spouse or trusted person in your life who can eyeball your electronic filing, even better. Having a second set of eyes could reduce the likelihood of a mistake when you’re filing taxes without the help of a professional.
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