Why is my tax return still being processed?

The IRS is closing in on the end of a particularly busy tax season that has seen the federal body tasked with additional work to help get pandemic-related support out to those in need.

Over 159 million stimulus check payments had been made at the last count, and the IRS is also in charge of introducing the new-look Child Tax Credit by July. With greater confusion than ever surrounding new income types like stimulus checks and additional unemployment benefits, the IRS has had a huge workload.

As such, many are experiencing delays with their tax returns, with some from 2019 still yet to be processed. This wait could be very significant for the millions of people needing their returns to be finalised to trigger extra stimulus check entitlements in the form of a ‘plus-up’ payment. Here’s what we know so far about the tax returns delays.

How long should a tax return take to be processed?

Given the enormous scale of the tax return system, the IRS is unable to give an exact timeline for filings to be processed. But they have advised: “The IRS issues more than 9 out of 10 refunds in less than 21 days. However, it’s possible your tax return may require additional review and take longer.”

Given the additional consequences that tax filings can have this year, it is no surprise that more than usual are requiring extra review. There can also be a delay for filers who choose to submit their tax returns on paper, rather than taking advantage of the e-filing portal.

However you filed your tax returns, you will be able to track the status of your filing online using the IRS’ Where’s My Refund? tool. The information will be available to e-filers within 24 hours of the submission, but paper filers may have to wait four weeks for the information to appear for them.

If you are expecting a tax refund, the online tracker will keep you updated on the three stages of the process: (1) Return Received, (2) Refund Approved and (3) Refund Sent.

IRS struggles to clear 2019 tax return backlog

Delays with this year’s filing is obviously frustrating for those waiting on refunds or ‘plus-up’ payments, but some have been waiting far longer for their tax returns to be processed. At a recent Congressional hearing, IRS Commissioner Charles Rettig said that the agency was battling to work through a backlog of around 2.4 million tax returns from last year.

Last spring the IRS was forced to temporarily shut down a number of tax processing centres as they adapted to the pandemic with necessary public health precautions. The filing deadline was extended to mid-July 2020 to allow Americans extra time but by the end of last year there were 11.7 million paper-filed tax returns still outstanding.

In response to the news, amid fears that a similar situation could arise this year, Melanie Lauridsen, senior manager of tax policy and advocacy for the American Institute of CPAs, described it as "the absolute worst filing season".