It’s Unofficial National Tax Refund Week

by
Adam Rust

The Internal Revenue Service projects that 19 million tax filers will receive a refund this week.

Ninety-two percent will receive their refund electronically.

No other week comes close – even for the week of April 12th to April 18th, when more than 9 million filers are expected to file returns with a refund.

Why now?

“It’s just the way the numbers flow,” said one experienced preparer in my community. “We know that the number of people choosing to file slows down in mid-March, because people who know they will get a refund have already filed.”

People who expect a refund file early – often before the IRS starts to process returns. They gather their documents in advance. As soon as preparers open their doors, they start filing.

The IRS started to process returns in January, but the return of refunds is cresting now because the IRS puts a hold on refunds associated with returns that include the Earned Income Credit or the Child Tax Credits.

The IRS screens returns that claim the EIC. They have become institutionally skeptical, as experience shows that approximately 1 in 4 returns claiming an EIC contains will include an error or errors, and usually those mistakes go in the favor of the filer. Sometimes the return has errors; sometimes there is evidence of intentional tax fraud.

If the IRS suspects that information is the return is incomplete or inaccurate, it holds back the portion of any refund that is attributable to the EIC. Additionally, the agency compares the claim at hand with the evidence of recent years. If, for example, a filer has claimed a six-year-old dependent for the first time, the return may be flagged for a manual review.

The e-file window opened on January 28th.

During the week of April 12th to April 18th, the volume of refunds will crest again. While it would seem counterintuitive that so many people would wait as long as possible to receive money, apparently many choose to do so.

Picture of card
Picture of card

File Now, Pay Later!

Most people don’t know that they don’t have to pay their taxes until the last day of tax season. Naturally you can pay when you file, but you can also ask the IRS to wait. There’s no reason to pay early unless it makes you feel better, and plenty of reason to wait. At the very least, you will benefit from the time value of money.

Other tax statistics:

• During this tax year, the IRS expects to issue refunds for 105.8 million returns.

• So far this year, refunds have dropped in value by 8.4 percent. According to the IRS’ newsroom, the average tax refund through February 1st is $1,865. Last year, filers with refunds received an average of $2,035. https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-february-1-2019

• Perhaps due to uncertainty over the new tax laws, filing is down significantly. Through February 1st, 16.04 million returns have been received compared to 18.3 million by this time last year – a decline of 12.4 percent. Receipts from professional have dropped 19.3 percent.

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