Dear Liz: You mentioned that people who file electronically and use direct deposit generally get their refunds much more quickly than those who file paper returns. That has always been true for me, but this year I filed in February and got a message that there was a problem but not to contact the IRS for 60 days. Then COVID-19 happened and the IRS basically shut down. Can you tell me when they will release my money?
Answer: No one knows. The IRS is still in the process of calling employees back to work and some operations centers won’t reopen until later this month.
As employees return, they’re confronting an almost incomprehensible backlog of paperwork and requests for help. Millions of paper returns are sitting in trailers, waiting to be input into the IRS’ computers, and no one has been available to process electronically filed returns that were flagged because of problems.
People who have already been waiting months may still have to wait several weeks more before they see their money or can even access someone who knows what’s happened to their returns. As a reminder, the IRS extended the tax filing deadline to July 15.
I filed electronically in early April, and our refund just showed up in our bank account yesterday.
The good news is that the direct deposit amount was more than the refund amount on our return. I assume the difference was interest because of the delay, and the amount of interest was far more than the refund would’ve earned in our bank account for that amount of time.
The IRS isn’t required to start paying interest on overdue refunds until 45 days after the filing deadline, or the date you filed if that’s later than the deadline. With July 15 being the deadline for the year, interest isn’t owed until late August. So it might be prudent to hang on to that extra money because it may be an overpayment that the IRS will someday demand you return.