IRS Backlog Persists: 10 Reasons Your Tax Refund May Be Delayed

In March 2020, the pandemic reached the U.S., smack in the middle of the tax filing season. The IRS, still with millions of returns left to process, ended up with a backlog it has yet to overcome. Currently, that backlog stands at around 7 million unprocessed individual returns.

The government has taken steps to bolster the IRS resources, with plans to hire 10,000 new employees and develop special surge teams to process returns. Still, it’ll likely be a while before the IRS works through its stockpile of outstanding returns. In addition to processing delays, here’s how the IRS backlog could impact you and your money.

Because the IRS is working through new returns while playing catch-up with old ones, amended returns are being processed on a first-come, first-served basis.

If you need to make corrections to a return filed in earlier years, be prepared for at least a 20-week processing time. Make sure your amended return is accurate and error-free to minimize further delays.

If you’ve tried calling the IRS during previous filing seasons, you probably spent a lot of time listening to its automated system. Due to the backlog, phone support is even less accessible this year.

The lack of customer service means you might be forced to look elsewhere for answers to your tax questions, which could in turn drag out your filing process. To remedy this, use tax filing software with built-in live support or work directly with a knowledgeable tax preparer.

The federal hiring effort is a helpful one when it comes to catching up on the IRS backlog, but it also means there are 10,000 new employees to train. You might be lucky enough to connect with an actual person over the phone. But there’s no guarantee the representative you speak to would have the experience you need to get a proper answer to your question.

To mitigate the risk of getting incomplete or inaccurate information, ask for specific documents or tax code numbers. Write these down so you can cross-reference them before you file.

The IRS is pushing for electronic filing over paper filings. This is for a good reason: data from every single paper return has to be manually entered into the IRS system. As you might guess, this process could have a long turnaround time–around four-to-six weeks.

By filing an accurate return electronically, you could cut that wait time down to about 21 days.

Recent changes to eligibility for the Earned Income Tax Credit are good news for some taxpayers, but they’re also causing delays on the backend.

These changes came about after IRS systems were updated for the 2022 tax filing season. As a result, filers who take advantage of the Earned Income Tax Credit could be subject to manual review.

If you’re undecided about claiming the EITC, weigh the potential financial benefit against your own patience, and be prepared to wait if you do claim the credit.

You’ll only file Form 8379 if you need to reclaim a part of a joint refund that was used to pay your spouse’s tax debt. If you do file this form, know that it could increase your return’s processing time by 14 weeks.

Unfortunately, there’s not much you could do to avoid this if you need to file this form. Special tax circumstances such as Form 8379 require additional IRS review, so your best bet is to file your complete return as quickly as possible. The sooner you get your return to the IRS, the sooner it might process it.

When the IRS finds issues with your tax return, it notifies you so you have an opportunity to correct the error or dispute their findings. The problem is that your response to these notices goes into the IRS’s paper processing backlog, even if you filed electronically.

If you’re not sure how to file taxes or aren’t confident doing it yourself, you could hire a tax preparer or use tax software that offers live support so you could reduce the risk of error.

You could file a Recovery Rebate Credit claim if you didn’t receive the full amount of the third Economic Impact Payment. If you make any tax mistakes on your claim, however, your return might enter the lengthy manual review process.

You should’ve gotten a notice from the IRS telling you exactly how much stimulus money you did or didn’t get. That’s the amount you’ll need to list on your claim to minimize further delays.

As with the Recovery Rebate Credit, Additional Child Tax Credit (ACTC) claims are subject to more scrutiny, particularly when the IRS finds a discrepancy. An additional complication is that you could use your 2019 income to qualify for an ACTC claim, but that requires further review.

You’re not required to file these claims, but if you decide to do so, make sure the information you list is accurate. Your return may still be delayed, but a flawless return may go through the manual review process much more quickly.

One of the more worrisome impacts of the IRS backlog is what it means for your personal finances. If you use your refund to get ahead on living expenses, a delayed return could throw off your budget.

Aside from making sure your return is complete and accurate, the wisest course of action here is to come up with a Plan B. Figure out how to manage your money without a timely refund. That way, if there are any hangups, you might minimize the financial blow.

Despite the IRS’s massive backlog, the agency maintains that many taxpayers could still expect to receive their refund within 21 days of filing. There are some caveats here, though.

Paper returns could take closer to four-to-six weeks to process. Your return may also be delayed if the IRS uncovers any discrepancies or if you filed an EITC, RRC, or ACTC claim. The IRS doesn’t give specific timelines for such cases, only stating that they may take longer than 21 days to resolve.

If you’re curious about the status of your refund, check the “Where’s My Refund?” tool online. Keep in mind that the IRS is inundated with calls during the filing season, and its representatives aren’t able to provide refund tracking information over the phone.

The only time you should call about your refund status is if you still haven’t received it after 21 days or if “Where’s My Refund?” directs you to do so.

A delayed tax return can be frustrating, and though you can’t control what happens within the IRS, you could take steps to speed things up on your end.

The fastest way to file (and maybe get your return) is by using the best tax software for your needs. TurboTax includes free IRS audit support with every return, whereas H&R Block lets you import prior returns filed elsewhere. If you’re worried about cost, TaxAct offers bundled pricing to help you save.

Choose the software with the right features for you, then get that return in ASAP for a better chance at a quicker turnaround time.