Understanding Tax Refunds During a Government Shutdown
Tax refunds can be a significant financial relief for many families. However, during a partial federal government shutdown, there might be some uncertainty, especially for those waiting to receive their federal refunds.
Triston Hastie Grant, a certified financial planner and the president of Waterstone Wealth Management, indicates that most refunds should still be processed. Still, there can be situations that might lead to delays.
Will Refunds Be Processed During the Shutdown?
Generally speaking, the answer is yes. The IRS’s automated systems will remain up and running during the shutdown. This allows electronically filed returns with direct deposit to be typically processed within the usual 21 days without issues. However, if a return needs manual review, things might get complicated.
Due to limited staffing during closures, returns that require human intervention could take longer to process.
What Triggers a Manual Review?
Some specific situations can flag your return for additional scrutiny:
- Missing tax forms (like W-2 or 1099)
- An incorrect social security number
- Mathematical errors
- Applying for child tax credits
- Applying for earned income tax credits
Refunds that involve certain refundable credits legally require further verification, which can’t be automated. If federal staffing is reduced, your refund may take longer to process.
How to Check Your Federal Refund Status
Taxpayers can track their federal refunds using the IRS’s “Where’s My Refund?” tool:
➡️ https://www.irs.gov/refunds
To use this tool, you’ll need:
- Your social security number
- Your application status
- The exact refund amount
This tool updates daily and usually reflects changes in status within 24 hours of receiving your electronic application. If you don’t see an update after 21 days, it’s wise to check the tool before reaching out to the IRS. If nothing has changed after 4 to 5 weeks, consider contacting them directly.
What About State Refunds in Oklahoma?
The federal government shutdown does not impact the Oklahoma State Tax Commission. Oklahoma taxpayers can check their state refunds through the OkTAP portal:
State refund schedules function independently from federal disruptions.
If You Owe Money or Receive a Large Refund
Hastie Grant notes that many taxpayers are often concerned with the resolution of either borrowing or obtaining a refund.
If you have debt:
- It typically means not enough tax was withheld throughout the year.
- While writing a check is often unpleasant, managing your paycheck more efficiently can be beneficial long-term.
If you’re due a large refund:
- This suggests that you’ve likely overpaid your taxes.
- Some individuals see this as a beneficial form of forced savings.
Ultimately, there isn’t a one-size-fits-all approach; it depends on what benefits your financial situation the most.
When Should I Be Concerned?
- The wait for a refund exceeds one month
- You receive a letter from the IRS asking for more documentation
- You notice discrepancies in the tracking system
Experts caution not to overlook such issues. Unpaid balances might incur penalties and interest, and while severe legal consequences for late payments are rare, unresolved issues can escalate in complexity and cost.
Preparing for Next Year
Financial experts suggest that planning ahead is crucial.
1. Review Withholding Tax Amount
Once tax season concludes, discuss your pay stub with HR.
- If you owe more than expected, adjust your withholding upward.
- If you want a larger refund while keeping more monthly, reduce your withholding.
2. Save All Tax Documents
Keep an eye on important envelopes in your mailbox starting January. Submitting incomplete forms raises the risk of manual review.
3. Consider Investment and Retirement Tax Planning
Retirees often ask about topics like:
- Taxation on Social Security
- Required minimum distributions (RMDs)
Understanding how these income sources are taxed is essential. Planning ahead can help mitigate the unpleasant surprises for business owners and retirees.
4. Use Electronic Filing with Direct Deposit
This remains the swiftest and most reliable method for receiving refunds.
