As federal tax receipts are starting to trend ahead of the Obama administration’s projections, there has been speculation that the Tax Cuts and Jobs Act (TCJA) might have actually boosted the economy. The question is, why haven’t more people received their tax refunds?
Whether Americans have received their tax refunds or not, some have reported that it’s been difficult to get their refund deposited into their bank accounts and others have even been forced to return their refunds to the IRS because of wait times of more than three weeks.
It turns out, the IRS is on pace to collect 7.2 percent more tax revenue in the current fiscal year than they did last year and is expecting the increase to continue into the next year. Most of the funds received will go directly to paying down the debt but with the current economic environment, the bigger portion will be used to reduce the length of time individuals and businesses have to wait for their refunds.
How to get your refund sooner
Even if you are one of the few Americans who have already received your tax refund, you can help your situation by remembering to make sure that your federal tax refund is deposited into your bank account immediately.
“If you have not received your refund as of now, that is a very bad thing for your bank account. It means the IRS and the bank are working with one another to get money in your account,” says Michael Christensen, a certified financial planner with 7 Wonders Wealth Management in Indianapolis.
If your bank account has been empty, you can start the deposit process by ensuring that you have any necessary IDs and a statement of your income and debts. You can use the available online banking options to deposit your refund into your account.
Work with your bank to make sure that your account is properly credited and that it has enough funds to cover any potential withdrawals.
“It is generally best to do this early on in the refund process, before you have tried to cut checks, use credit cards or ask for ATM cash transfers,” says Kelsy King, a certified financial planner and managing director at Independence Wealth Advisors in Souderton, Pa.
Why you might still need to wait
It’s also important to keep in mind that not everyone has been making timely checks or payments on their taxes.
“Even if you have received your refund already, it may still be worth paying extra attention to. It takes several weeks for the refund to clear your account if you want it to be refunded immediately,” says Christopher Mardosy, a certified financial planner and senior wealth management analyst at Four Rivers Wealth Management in Rossmoor, Calif.
To make sure that your money gets deposited into your account as soon as possible, you might need to increase your monthly direct deposit from up to $500 to up to $1,000.
If you are due a refund, taking the extra step to increase your direct deposit could end up paying off. Most banks and credit unions will approve your direct deposit request without question. If the request is denied, contact your account representative for assistance and explain the situation.
If you are withholding too much and need to adjust your withholding, you will be able to do so electronically. You can also use a tax-preparer service that will work with you to help you determine your current total withholding.
In addition to boosting your personal savings rate, the longer you wait to deposit your tax refund back into your bank account, the more you will likely lose out on on interest earnings. Interest rates are at their highest level in more than five years and rates on certificates of deposit are also at their highest level in at least four years.
Waiting longer for your refund makes it more likely that you will lose out on any interest earnings on your savings or investments.
If you feel you need more time to adjust your withholding, you should contact your employer or the IRS to have the matter resolved. Once you’ve determined your current total withholding, you can go to a tax-preparer service to request an adjustment.
But, regardless of how you see your situation, it is important to remember that it isn’t your fault. If you are one of the unfortunate Americans who have not yet received your refund, chances are you have another responsibility that can take precedence over your money.