The Internal Revenue Service (IRS) recently put out a news release dispelling 5 myths about tax refunds (and how to check on the status of tax refunds). Thanks to a new tax refund tracking tool that the IRS has developed, you can now check the status of your refund online or through their mobile app.
With these tracking tools, taxpayers can:
- See the progress of their tax return, from when they received it to when they’re done processing it.
- If their tax return has been approved or sent.
However, even this new tracking tool has caused a few misconceptions that are persistently floating around social media. Check out this quick summary of what the IRS wants taxpayers to know about tax refunds and the best way to use their refund tracking tools.
1. You don’t have to adjust your paycheck withholding for 2019 if you got a refund for 2018.
This is one of the most common myths about taxes, which is why we’re listing it first. Sure, some people may know to make adjustments once a big life event happens, such as getting a raise at work, having a baby, getting married, buying a house, etc.
However, changes in the tax law can change withholding amounts without taxpayers doing anything – which is why everyone should check their withholding amounts and do at least some minimal amount of tax planning each year. (As a tax preparer, you definitely want to encourage this good habit with all your clients.)
The IRS Withholding Calculator is a great place to start to see if your paycheck withholding is right for 2019.
2. Call the IRS or your tax professional to find out the real date of when you’re getting your refund.
Sadly, this is not true – and it can be frustrating waiting on hold trying to speak to someone at the IRS. The truth is that the IRS agents have the same information available to them as what you do when you use their online “Where’s My Refund?” tool or when you use their IRS2Go mobile app. So, using these self-service tools is more likely to give you your refund information faster.
3. Order a tax transcript as a “secret way” to learn your refund date.
Ordering a tax transcript is great if you need information to help you prepare your taxes, such as:
- Deductions and credits you’ve claimed in the past
- Depreciation schedules
- Validation of past income
- Tax filing status of things, such as mortgages, student loans and small business loan applications
A tax transcript will NOT give you any additional or more accurate information about when to expect your refund or where your tax return and tax refund are in the process.
4. “Where’s My Refund?” and the app don’t have a date yet, so they must be wrong.
A lot goes into processing tax returns and issuing refunds. While the IRS issues most tax refunds within 21 days, some refunds can take more or less time. In order to keep taxpayers up to date on where their returns stand, the IRS updates their refund tracking tools once every 24 hours, usually overnight. Therefore, you only need to check the tool once a day. If you don’t see a date one day, check the next day.
And remember, if there is a problem processing your tax return and the IRS needs to talk to you, you’ll be contacted by mail. (Not by phone – not by email. If you ever get a phone call or an email from the IRS, it’s a phishing scam, and you should not respond. End of story.)
5. The tracking tools aren’t showing the right refund amount, so they must be wrong.
Is “Where’s My Refund?” or the mobile app showing a different refund amount than what you expected? That doesn’t necessarily mean the tool is wrong. The IRS lists several reasons in this news release as to why a taxpayer could see a decrease in their refund amount, including:
- Math errors or mistakes on the tax return
- Delinquent federal taxes
- Delinquent nontax obligations, such as state taxes, child support and student loans
- A portion of your refund is being held while the IRS reviews an item claimed on your return
When any of these situations happen, a letter of explanation will be sent about what adjustments were made from the IRS and/or the Department of Treasury’s Bureau of the Fiscal Service.
How to know when there really is a problem
The IRS advises taxpayers to contact the IRS tax help hotline if:
- It has been 21 days or more since their tax return was e-filed and they haven’t received their refund.
- It has been six weeks or more since their return was mailed and they haven’t received their refund.
- One of the tracking tools is telling them to contact the IRS
Share these myths and tips with clients, and don’t forget to encourage clients to get their taxes done by the 15th or file an extension with your help.