Anticipating a tax refund can help take the stress out of tax season, providing a much-needed relief valve once the process of sorting through forms and double-checking your numbers is in your rearview mirror.
But waiting for that refund can be excruciating. Compound that with the rumors, bad advice and general misinformation that always seem to hang around during tax time and that wait can become even more frustrating, creating doubt and adding to the fear you’ve done something wrong on your return.
It’s time for some truth. Here’s a look at the top tax refund myths to watch out for and avoid in 2020.
My 2020 tax refund will be late
TCJA was officially signed into law more than two years ago. Yet, many continue to believe the 2017 tax reform package will somehow impact and delay their tax refund—in 2020!
Whether the result of a persistent misunderstanding or just plain ol’ bad information, this is just not the case. Most returns received by the IRS still take around 21 days to process (when filed electronically) and are turned around even faster when you sign up for direct deposit. Paper returns can take anywhere from four-to-eight weeks once the IRS has confirmed receipt.
Typically, the only way a tax refund is delayed is when it’s subject to further review, such as when your return is missing information or something has been miscalculated.
Once I get my refund, I won’t get audited
You got your check, so everything must be ok, right? Not necessarily…
While the chances of being audited are generally pretty slim to start with, getting a refund doesn’t mean you’re off the hook. A 2020 tax refund simply shows the IRS has reviewed your return and agreed with your math. Selecting returns for audit is usually based on a number of factors unrelated to your refund—and is often done long after the money has made it into your bank account.
The IRS may audit returns going back three years or more, depending on what they’ve found during the return review process. Refunds tend to have little-to-no impact on that decision.
An electronic refund gives the IRS access to my bank account
Filing your return electronically is one of the fastest ways to get your 2020 tax refund. But many shy away from this option due to the unfounded myth electronic filing provides the IRS easy access to their bank account, which couldn’t be further from the truth.
First, e-filing is simply offered as a time and cost-saving alternative to submitting a paper return, something that has drastically sped up the filing process since coming into play. Second, e-filing does not provide the IRS carte blanche to snoop through your financials or bank statements, but gives access only when it comes to depositing your refund.
In other words, an electronic refund is not a ploy by the IRS to dig into your records, but rather a way to simplify and shorten the tax filing process.
The IRS must send me the refund amount on my return
Like it or not, the IRS is not legally bound to send you the amount listed on your 2020 tax return. In fact, your refund may be smaller or even larger than you expect for a number of reasons, including
- A math error. When the IRS finds a mistake or miscalculation on your return, it will likely correct the amount listed when you filed.
- A refund offset. Lower refunds may be the result of a refund offset, when the government applies a portion or all of your expected 2020 tax refund toward past-due income taxes (federal and state), student loans, child support, alimony, or other outstanding debts.
When a refund offset occurs, you’ll likely receive letters from the IRS and the Department of Treasury’s Bureau of Fiscal Service explaining where the money is going and why.
I’ll get an email from the IRS if I’m owed a refund
100% false! The Internal Revenue Service NEVER uses email to initiate taxpayer communications, meaning any unsolicited email appearing to come from the IRS is likely just a phishing scam. Such schemes are generally aimed at stealing your Social Security number, bank account info and other vital personal data for the purpose of identity theft.
If you do receive such a message, avoid replying, clicking on any links or opening any attachments at all costs. Instead, forward that email to firstname.lastname@example.org and delete the message from your inbox.
I’m owed a refund, which means I don’t have to file
While you may not have met the minimum income threshold required to file your tax return, you do need to file a return to get you’re 2020 tax refund from the IRS. And in most cases, you have a three-year window from the original 2020 due date to claim that refund, after which you risk losing that money altogether.
Once that window closes, the government’s hands are tied when it comes to sending your refund or applying credits (such as tax overpayments) to any years your taxes were underpaid.
If you are owed a refund for any of the past three years but can’t locate the forms you need to file (W2s, 1099s, 1098s, etc.) you may request them from your employer or seek out a tax return transcript from the IRS.
Will I get a tax refund this year?
Our 2020 tax refund calculator is a great resource for calculating your income taxes, identifying tax breaks and determine if you’re getting money back after filing your return. Other user-friendly tools for navigating your taxes and maximizing your federal refund include our 1090 Misc. Tax Calculator, Child Tax Credit Calculator and 1040 Tax Estimator.
At Liberty Tax®, our goal is to provide you the tools, expertise and support needed to prepare your taxes and get the refund you deserve. We’re committed to making tax prep fast and easy—and ensure your return is working to your advantage.