How Long Does It Take For Federal Tax Refund (And Why)?

Exact Answer: 21 Days

When the taxpayer pays his taxes more than what is due, a need for a federal tax refund arises. A refund or rebate of taxes is made to compensate the taxpayer for the excess of tax paid by him. In some countries, a small amount of interest is also paid along with the tax refund.

Tax refunds in the United States are dealt with by the Internal Revenue Service. Canada has Canada Revenue Agency and India has its Income Tax body to deal with tax refunds. These revenue or tax bodies assess your tax returns and refund forms, independently estimate tax refunds due and pay them.

How Long Does It Take For Federal Tax Refund?

Tax Refund Delivery MethodTime Taken
E-file with direct deposit2 weeks
Paper file with direct deposit3 weeks
E-file with a refund check in the mail7 weeks
Paper file with a refund check in the mail7 weeks

The Internal Revenue Service refunds over 90 percentage of refund filings within two to three weeks. An average taxpayer enjoys the probability of accessing his tax refunds within 21 days.

How early a taxpayer gets his rebate also depends on the choice of method of refund selected. The IRS offers several methods of payment for refunds the organization owes.

A person can go for a direct deposit of the refund in the bank account. This method of refund is the simplest and fastest. There are least delays and it offers hassle-free transactions.

One of the other fastest ways of refund access is by paper check sent by mail. Although it requires more time than direct deposit, still it has many takers. This method, though, is faster than other ways.

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A taxpayer also enjoys the option of accessing refunds via debit cards. The value of federal tax refunds can be converted into the corresponding value of debit cards. This method is, however, time-consuming.

There are also options for purchasing U.S. Savings bonds of up to $5,000. The refund can also be distributed between the three taxpayer’s financial accounts. These accounts can be a traditional IRA, Roth IRA, or SEP-IRA.

Why Does It Take So Long For Federal Tax Refunds?

The Internal Revenue Service generally processes all the tax refunds within 21 days. 21 days for a simple tax refund is not a short time.

The basic reason behind this magnitude of time is the fact that the majority of the tax refund filings are on paper. Such large paper scrutiny requires huge manpower and timing concerns. It makes the refund process unnecessarily stretched and delayed.

To err is human. If there is paperwork, there are innumerable possibilities of errors. There are many cases of the name is spelled wrong, problems with the social security numbers, and many other errors. Being in hurry is often the root cause of such errors.

There are also instances of mathematical errors committed in the tax refund filings. These errors will certainly not tally with the official government figures. In such cases, there is a huge possibility of your refund getting delayed.

Bad handwriting could be another reason for the slow process of federal tax refunds. Bad and sloppy handwriting needs time to be deciphered and is certainly exhaustive for scrutinizing personnel.

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Similarly, if the tax refund is being filed either too early or too late, then it may be cut off from the mainstream set of filings. Early filing of refund may not be caught in the software and late filing leads to a heap of such files. Thus, a federal tax refund should be filed at the appropriate time.

Conclusion

The majority of federal tax refunds are processed within 21 days. Nonetheless, there are also instances when the refunds get delayed beyond their expected time. There are a variety of causes behind such a scenario, the prominent being lack of manpower and writing errors.

However, if taxpayers want to avoid such a situation, the government offers them the option to file for these tax refunds online. Online tax refund filing minimizes errors and is simple. It speeds up the process of disbursements of those refunds, which might take 2-3 weeks on paperwork.

References

  1. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/uflr5&section=25
  2. https://www.journals.uchicago.edu/doi/full/10.1086/689357
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