There’s a famous quote about how nothing in life is certain except for death and taxes, and while it’s origins are debated as being form Benjamin Franklin (1789), Edward Ward (1724), or Christopher Bullock (1716), one thing is certain: They were all correct. Apparently, taxes and death have been at the top of our list of fears for centuries.
Tax season can be stressful. People expecting a refund will often file early, but most people tend to wait until the last possible minute, and that just adds to the stress. And while requesting an extension buys you time on the actual filing, it doesn’t actually help if you owe any money. You still need to pay on time or be faced with late fees and accumulating interest.
If you’re expecting a refund, that doesn’t necessarily mean there’s no stress either. There’s still the paperwork and making sure everything is filled out properly and on time, although at least there’s the incentive to get it submitted early. After all, the earlier you file, the earlier you’ll get your refund. Or will you?
When can I expect to get my tax refund?
Whether you filed taxes early or right at the deadline, when you’re expecting to get something back, the first question you’re probably asking is “How long does my refund take?” The answer is that it depends…
Mailing your tax returns in versus filing online obviously makes the biggest difference in how long it takes, but in general, it will usually take about three weeks from when your return is processed. Expect a timing difference based on whether you requested an automatic deposit or a check too, but tax refunds usually arrive more quickly than many people anticipate. Of course, that’s all based on everything being filed correctly and no questions coming up.
In most cases, you can expect to see your full refund, but there are times when you might only ever see a portion of your refund—if anything at all. That’s right; there are situations when the IRS or your state will claim a portion (or all) of our refund before you ever see it.
Why wouldn’t I get my full refund?
In general, most people shouldn’t be surprised when their refund amount is different than what they were expecting. It can sometimes be a surprise, but only if you’re either not paying attention or were unaware that certain debt payments could be automatically taken before the refund ever arrives.
These are the most common instances where you might not see your income tax refund this year:
Previous years’ tax debt
In some cases, you may have made an error in a previous year’s filing that would mean you owe days on one or multiple years, but you would receive a notice stating how much is owed, for what years, and what the reason was. Therefore, this one shouldn’t be a surprise.
For those, especially self-employed individuals, who are currently in an installment agreement while paying off taxes from one or more previous years, your refund or a portion of it will go toward the oldest debt first.
In those situations, you might be expecting to get your refund if you had a good tax year, but if what you’re getting back is less than or equal to what you owe, the IRS will apply your refund directly to that debt. Luckily, you will get a notification stating what year(s) your refund was applied toward.
State tax owed
This is another one that shouldn’t be a surprise, as you’ll normally know this information during the filing process. If you’re getting a federal refund but owe money to the state in which you reside, you’ll often have the option of that refund going directly toward the state taxes owed.
Federal student loans
As long as you’re not in default and paying your federal student loans on time, there’s no need to worry about your refund being taken without warning. However, if you’ve missed payments and not made arrangements to get back on track, then there’s a high likelihood your refund will end up going toward that debt. You should know if you’re in default, though, so this shouldn’t sneak up on you.
This won’t happen with private student loans, however. For those, you might have wages or assets garnished, but it wouldn’t be the IRS deducting from your refund.
Much like student loans, child support payments are mandated, so if you fall behind and haven’t made the appropriate arrangements to meet your obligations, the IRS can deduct directly from your income tax refund.
This one only occurs if you’ve had to claim unemployment benefits, and it usually occurs in cases of unemployment fraud when an individual has either taken benefits for longer than allowed for their situation or that weren’t due at all.
Can credit card companies take my income tax refund?
Once people learn that they might not see some or any of their income tax refund due to old tax debts or student loans, panic can start to set in about debt from credit cards and other loans.
If you’re excessively late or in default and have had a judgment in court, then yes, your wages can be garnished or money can be taken directly from your bank account. However, that debt can’t be taken directly from your tax refund—although it can be taken once deposited into your account.
Avoid losing your income tax refund
If you’ve fallen behind or risk falling behind on a student loan or child support and don’t want to risk missing out on any portion of your income tax refund, or if you need to buy yourself some time on other debts while waiting for your refund, you might want to consider an online personal loan.
Applying for a personal installment loan with Helix by Lead Bank takes just a few minutes and you’ll have a decision back in moments. Once approved, the money will be in your account by the next business day, so you can avoid late fees on other debt and save money by paying back your loan with your tax refund.