AMERICAN CAN REALLY MAKE MONEY on a deferred tax return because the IRS will pay you interest.
It could be helpful because Treasury officials have warned that this tax season will another challenge.
This is partly due to the millions of unresolved returns from the previous year.
In an annual report to Congress, national taxpayer advocate Erin M. Collins also said: “Paper is the kryptonite of the IRS, and the agency is still buried in it.”
The report warned that “the IRS is in crisis” and that “the imbalance between the IRS’s workload and its resources has never been greater.”
As a result, many Americans should expect delays in receiving their tax refunds.
This comes as some taxpayers are still waiting for refunds nine months after filing their tax returns last year, the report adds.
If your refund is delayed, you can expect to be paid for it.
This is because the IRS is required by law to pay interest – and you can usually get it if your refund is issued after the statutory 45-day period.
However, paying interest may not thrill you.
For the 2019 tax return, the average amount of interest payments was $18.
The calculation can be complicated, but the interest rate is usually around 3% per annum.
This means that for a $1,000 refund, one person will receive about $2.50 for each month your refund is delayed.
For 2019 tax returns, nearly 14 million individual taxpayers who filed their returns on time and were reimbursed on time received interest.
When the IRS distributed tax refunds in 2020, it paid $3 billion in interest on the refunds.
How to speed up your tax refund?
You can speed up your application by submitting your application as early as possible, starting January 24.
You don’t want to delay because the longer you wait for tax season, the busier the IRS will be.
Another great way to get your refund faster electronic filing.
By filing electronically, you don’t have to deal with things getting lost in the mail.
When you apply, you’ll want to make sure all of your information is up to date.
When the information doesn’t match, it can lead to a delay in receiving your refund.
Finally, direct deposit is the easiest and fastest way to get your refund as it will only appear in your bank account.
It avoids the possibility that a refund check could be lost, stolen, or returned to the IRS as undeliverable.
Most importantly, direct deposit saves you money. Taxpayers pay more than $1 for each paper refund issued, but only one cent per direct deposit.
When you apply in 2022, the Sun reveals why your tax return may be smaller.
We also explain your unemployment benefits.
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https://www.the-sun.com/money/4456027/delayed-tax-refund-earn-money-interest/ How Deferred Tax Returns Can Really Make You Money As Taxpayers Wait Nine Months for Cash