When Will I Get My Tax Refund? 22 Million Already Have
- The Internal Revenue Service (IRS) has begun giving out tax refunds, with 22 million already receiving their money, with the average recipient receiving $3,536.
- The large refund is great as the large influx of cash can be used for different purposes.
- With the IRS experiencing a backlog for tax returns, below are some ways to help expedite the process and ensure one does not end up as part of the backlog.
The 2021 tax season has begun, and many people are receiving their tax refunds. So far, around 22 million people have received their refunds from the Internal Revenue Service (IRS), with the average amount around $3,536. Due to the high tax refund, it is essential that people use their money wisely to improve their financial situation.
Average Payout of Tax Returns
So far, the average payout for those who have received their refunds is $3,536. However, it should be pointed out that although this value is roughly $700 higher than last year, it will most likely decrease as some people will have smaller tax refunds.
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If applicants had received Advanced Child Tax Credits, a large payout from a mutual fund, or had paused their student loan payments, they are likely to receive a refund lower than the mentioned average.
How to Use The Tax Refund Amount Wisely
With the IRS giving out higher payouts to applicants for their income tax returns, it is essential to use the money effectively and ensure it does not go to waste. Here are some ways to potentially use the tax refund amount effectively.
Pay Off Student Loans
With monthly student loan payments rumored to start in the coming months, now is the perfect time to use the tax refund towards the monthly student loan payments. The tax refund is essentially free money from the government, and this money can be used to help lower student debt.
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Contribute to Emergency Savings Fund
With the large sum of cash from the government, now is the ideal time to contribute to the emergency fund. The emergency fund consists of three to six months worth of living expenses. Therefore, it is vital to have an emergency fund to aid in paying for living expenses should an unexpected circumstance occur.
Now that you know what to do when you receive your tax refund, it is vital to understand how long it will take to receive it.
Why the Tax Return May Take Longer than Normal
The process to receive your tax refund on the federal tax returns filed typically takes 21 days if you electronically file them. However, there are some instances where it would take longer to process tax returns.
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For example, if you filed a paper return, your refund status will take additional time to change, and the IRS will send you a check. It would take longer because the necessary information will take time due to the required tax information being transferred via the mail courier system.
Inaccurate Information on Tax Returns
The IRS has a tax system to expedite the tax return process and help people receive their tax refunds quicker. However, if the information is filled out incorrectly, this will trigger a manual review and cause the tax return process to take longer than usual. Therefore, it is important to consult a tax professional when filing your tax return and ensure that all information is filled out correctly.
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Not Keeping the Necessary Tax Documents
One additional cause that has slowed some of their tax return processes down is the lack of relevant documents. For example, the IRS sent letters out regarding the Advanced Child Tax Credit and Recovery Rebate Credit. Suppose the recipient of the letters threw out these documents. In that case, it could delay the filer’s tax return process as they do not have the necessary documentation to provide accurate information on their tax return.
How to Expedite the Tax Return Process
Currently, the IRS is experiencing a backlog for their tax returns, with some individuals still missing their 2020 tax refund. Consequently, to ensure the process goes smoothly and you are not caught in the backlog, there are some steps that you can take to speed up the tax return process.
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File Information Correctly
As mentioned before, the IRS uses tax software to identify certain returns that may require further investigation. When information is filled out incorrectly, it may trigger a manual review, which will cause the filing status of the tax return to not change for a prolonged period. Thus, it is crucial to double-check the information to ensure its accuracy when filing returns.
Opting in for Direct Deposit
When the IRS wants to issue the tax return, they use the applicant’s information on hand to determine how they will give their refund. If the applicant does not have a direct deposit set up with the IRS, the IRS is forced to mail a paper check, which will take longer. Therefore, it is important to choose direct deposit if you wish to receive a refund faster from the IRS as the tax refund will go into your bank account once your tax return process is over.
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The IRS stated they could not issue refunds for those who claimed the Earned Income Tax Credit (EITC) or additional child tax credit until mid-February, in which case, the applicants would receive the money by approximately March 1.
However, if you wish to stay up to date with your tax return process, you can use the IRS mobile app “IRS2GO.” This app will give you an update after 24 hours if you filed electronically and four weeks if you paper-filed.
Tax refunds are great as extra cash goes into your pockets; however, it is not an excuse to spend the money inefficiently and impulsively. By following the steps listed above, you can use your tax refund effectively to improve your financial status and expedite the tax return process.
What are some other ways you can use your tax refund money efficiently? Please share your thoughts with us in the comment section below.
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