Tax Refund Delays: Is the IRS Holding Refunds This Year?

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Feb. 11 2022, Published 2:17 p.m. ET

If you prefer to file taxes as soon as the IRS accepts them instead of waiting until the 2022 tax deadline, you understandably hope to receive your refund promptly. However, the COVID-19 pandemic continues to impact staffing. Is the IRS holding refunds in 2022?

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In cases where individuals are claiming specific tax credits, the IRS is holding on to tax refunds temporarily. Most people should expect a quick tax refund process. The IRS continues to recommend electronic filing and direct deposit to ensure rapid processing, although there still might be delays in some cases.

irs refund delays
Source: IRS Facebook
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The IRS is holding onto refunds claiming the EITC or ACTC.

Anxious tax filers submitted their required tax return paperwork during the first few weeks of tax season (the IRS started accepting returns on Jan. 24). Unfortunately, some people won’t receive their refund as quickly as they hoped.

By law, the IRS can't issue refunds for those claiming either the EITC (Earned Income Tax Credit) or the ACTC (Additional Child Tax Credit) before the middle of February. The agency currently says that people who have filed and used either of these tax credits can expect their refund on March 1.

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The quickest tax refunds can be expected for those who file electronically, choose to receive their refund via direct deposit, and submit forms with no errors. Calculation errors, misspellings, or incorrect Social Security numbers are some of the most common reasons why a tax return gets rejected.

The IRS might need more information if you claimed the EITC or ACTC.

Part of the reason for the delay is the growing concern about identity theft and falsely filed tax returns. The IRS thinks that many identity thieves will file as early as possible. They will claim maximum tax credits and hope to get the money before the IRS realizes the error.

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According to TheCollegeInvestor.com, the IRS estimated losses of $1.3 billion due to fraudulent tax refunds last year. Waiting until Feb. 15 to start processing refunds is one way to try to catch criminals and avoid paying double refunds—once to the criminal and once to the rightful recipient.

The IRS will contact people if it needs more information about the EITC or ACTC claim (which takes extra time).

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children blocks
Source: Marisa Howenstine Unsplash

Claiming the Additional Child Tax Credit means the IRS won't process your refund until mid-February.

Most people should receive tax refunds within 21 days if they use e-file and direct deposit.

Aside from the delays due to the EITC and Additional Child Tax Credit, the IRS anticipates a fairly quick turnaround (21 days) on electronically filed returns with direct deposit. US News said that the IRS must pay interest on refunds not received within 45 days of filing.

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Other ways to minimize the risk of delays include checking your tax return carefully for errors and filing early.

The COVID-19 pandemic continues to impact taxes and refunds.

IRS Commissioner Chuck Rettig said in a press release, “IRS employees are working hard to deliver a successful 2022 tax season while facing enormous challenges related to the pandemic.” There are staffing shortages due to illness and mandatory absences in many industries.

The IRS is also dealing with backlogs from last year’s tax returns that continue to cause delays this year.

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