Generally, the IRS processes 9 out of 10 returns within 21 days. If you have not yet received your return, you may need to review your return and contact the IRS.
The most common reason for the delay of the 2020 tax returns is the changes brought about by the American Rescue Plan and the stimulus payments issued. The IRS is matching the amount of stimulus payments they issued to the amount you reported on your tax return.
The 2020 tax return contains the Recovery Rebate Credit which asks you to enter the dollar amount of the stimulus payments received for both the first and second round of payments. It does not matter when the first two stimulus payments were received (2020 or 2021).
If the amount you enter for the stimulus payments results in a credit indicating you did not receive the correct amount of stimulus payments, the entries are compared to the IRS database. If the IRS database shows the payments were issued, the return is forwarded to the error department for review. These returns are then required to be reviewed and adjusted. This is slowing the IRS's ability to process refunds in a timely manner.
What should you do?
- Make sure you have the correct information in your return. If the IRS does not have all the information to process the return, your refund may be delayed.
- Check the IRS Where's My Refund? tool to see if the IRS has any information for you. Not only does the IRS post your expected refund date here, but also uses this to communicate if they need further information or wish you to contact them. If your refund has been reduced, this section can provide you with some information until you receive a letter from the IRS with a full explanation.
- Review your entries for the Recovery Rebate Credit as compared to the IRS database. If you do not remember the amounts, refer to your notice 1444 or 1444-B . You can also check the IRS website for the amounts of the stimulus payments issued the IRS has on record.
- The IRS has very high wait times and call volume. However, you may wish to contact the IRS at 800-829-1040 or your local IRS office. Due to the increasing number of fraudulent returns, the IRS waits for taxpayers to contact them rather than reach out to the taxpayer asking for information. If your return was submitted more than 21 days ago, you may wish to contact the IRS to see if more information is required. You may be asked to verify information contained on your return, your identity or your banking information. Please have your return available when you call. If asked to verify your banking information, please note that if you are having your tax preparation fees deducted from the refund or the refund is being deposited on a prepaid card, the banking information may not match your personal banking information. Contact us if you need to verify banking information for a third party bank or a prepaid card.