Refund Delays: What You Need to Know

January 15, 2015 : Kathy Pickering - Executive Director, The Tax Institute

Waiting is hard. Waiting in line at the DMV, in the doctor’s waiting room or at a red light can all be frustrating experiences when we want to get somewhere. Waiting to get your tax refund can be downright maddening, especially given tax refund delays.

The truth is that most taxpayers will get their refund in a timely manner – within 21 days, according to the IRS. Taxpayers whose returns are accurate, complete and e-filed won’t likely see much of a difference this year.

What Causes Refund Delays?

However, a refund could be delayed for numerous reasons. Among them:

  • Information on the return doesn’t match other government records, like an incorrectly typed Social Security Number
  • There are tax issues in question that require further documentation or trigger an audit
  • The taxpayer owes a balance, so the refund is offset to pay part or all of it

A New Reason for A Delayed Return…

A newer-to-the-scene reason your refund may take longer to be processed is the Affordable Care Act, which is enforced through the tax return process. All taxpayers now have to indicate whether they had insurance for a full year on their tax return.

If you enrolled in insurance through a Marketplace, you will receive a new information statement (Form 1095-A, Health Insurance Marketplace Statement), which you will use to fill out a new tax form (Form 8962, Premium Tax Credit) to file with your return.

Filling out the new Form 8962 can be complicated because, for most people who have Marketplace insurance plans, it will mean filling out specific monthly line items, and settling up the total amount of tax credit you were eligible to receive within the tax year. The bottom line: Double check the information you’ve entered on this form, because the IRS will match it against the information Health and Human Services has.

Any discrepancy could require further review. If you are missing a form or there’s a mismatch in the data, it may require further review. Of course, further review means that your refund could be delayed.

Because the review is completed by a person and not a computer, it’s hard to estimate exactly how long the refund will take, especially taking into account IRS budget cuts and backlogs that can occur. The IRS has said refunds could be delayed an extra week or more if returns require further review. 

How to Avoid a Delayed Refund

To avoid this situation before it happens, it’s exceedingly important to ensure you are completing the appropriate forms with the correct information – and to double-check everything before filing.

You should also make sure you have all your documents before filing. That means any Forms W-2, Forms 1099 from your bank or other employers, and, importantly, Form 1095-A if you had a Marketplace health insurance plan at any time during 2014.

If you’re in a hurry to file and get your refund, keep in mind that it’s a bad idea to estimate information on Form 8962. If you estimate, you’ll set yourself up for a data mismatch and a much longer refund delay. The best course is to wait until you receive your Form 1095-A, then file.

Finally, remember that the IRS will contact you directly if there are problems with your return or if it needs additional information. Any request from the IRS will come in the mail, not via email or text.

Editor’s Note: This post was updated on August 3, 2016. 

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Kathy Pickering - Executive Director, The Tax Institute

Kathy is the executive director of The Tax Institute at H&R Block. With more than a decade of experience in tax operations and 25 years in information technology, Pickering is responsible for the strategic direction and management for a team of the nation's top experts on tax issues. Prior to joining H&R Block, Pickering worked with Sprint PCS, Olsten Health Services and various consulting firms where she focused on implementing accounting and financial systems, and leading Enterprise Resource Planning (ERP) software implementations, such as JD Edwards and PeopleSoft software.