Feb 07 2009
Last Year’s Stimulus May Delay This Years Tax Return
I jumped online today really quick and the first thing I saw was an article written for the Wall Street Journal called Early Filers Pile on Errors. As someone who deals with taxes on a daily basis I have to agree with the statement “As if doing your tax return wasn’t tricky enough, it’s particularly easy to make mistakes this year, thanks in large part to the economic-stimulus payments sent out in 2008…” .
The confusion began upon the first IRS drain on January 17th and is still afecting returns almost a full month later. Early filers either put in the wrong amount they received, eroniously claimed the credit or put the stimulus amount they received on the Recovery Rebate Line instead of the amount they are due if any. If your filing status did not change from last year to this chances are you already recieved your Credit in full last year. If you added a dependant or your income changed dramatically then you may be entitled to additional amount this year.
If you use a tax service professional that offers you the choice of receiving a loan off of your federal refund like Jackson Hewitt or H&R Block, then claiming an amount other than zero for the RRC will automatically disqualify you for those bank products. Their work around for this tricky situation is to leave the line blank and let the IRS determine your amount.
The problem that is arrising is this: electroniclly filed returns are historiclly funded somewhere within 8-15 days from the time the IRS acknowledges the return, but with the extra work involved tracking down filers who are indeed due a Recovery Rebate Credit can delay the IRS funding by about a week.
The problem this is presenting to the Tax Professional industry is anxious and annoyed Tax Filers who wanted their money yesterday. Many do not understand the tax filing process and believe that their preparer must have made a mistake on their return causing the delay. The automated messages the IRS has set up to help filers keep track of what is going on with their returns, makes it even harder to convine taxpayers that although the recording says a mistake was made on their return, the mistake was necessary in order to process their return with the bank.
The banks loan taxpayers some or all of their “estimated” tax refund IF they do not appear to be a “risk”; in some cases in as little as 1 day. It is costly but many do not care about the extra money as long as they can get their money today. The problem that is being encountered this year is the banks are denying more taxpayers than in the past and the taxpayers must wait until the IRS deposits their refund before they receive a check. Sometimes this can be closer to or beyond that 15th day.
Everyday I deal with angry taxpayers who did not pay attention when I explained the process and they selectively disregarded the “estimated” wait time. Just because we have estimated a 8-15 day wait does not mean the taxpayer will receive their refund in that time. Ultimately the IRS is in control of when you will actually receive your refund if you receive it at all.
Well I hope the taxpayers that read this will keep in mind that their paid tax preparers are just that, someone who “Prepares” your taxes. Once the tax return is submitted and accepted by the IRS the preparer can do nothing but wait just like you.
