tax refund

How long does it take to get your tax refund?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


Your annual income tax return may seem quite complex to fill out, but its structure is actually quite simple. On this document you calculate all of your earnings and subtract eligible deductions and credits.

The remaining amount is your taxable income, and you multiply this by the applicable tax rate to determine how much income tax you owe to the government.

However, in most cases, you prepay your income tax through deductions from your regular paycheck. If the amount you paid through these deductions during the year is greater than the amount you owe, you receive a tax refund.

After you file your taxes, you wait for the IRS to review your return and issue a refund. The IRS claims that it approves most tax refunds within 21 days but it can take longer.

Understanding this process can help you move the process along to get your refund.

How the IRS evaluates the return

Once your tax return reaches the IRS, an auditor confirms or questions the information you have provided, starting with the first section of the return. The auditor inspects the amount of money you claimed as income, which should accurately show every source of income you had over the course of the tax year.

If you are employed, you should have a form W-2 from each employer. This document contains the total wages the employer paid you during the preceding year.

If you are an independent contractor, you should have a W-9, which contains the same information. Copy all relevant earning and taxation information from these slips accurately on to your income tax return.

If you make a mistake entering information, the IRS must spend more time looking for the correction figures. Double-check your amounts before sending in your tax return to avoid this problem which extends the length of time you wait for your refund.

Tax deductions and credits

The more tax deductions and credits you claim on your annual tax return, the longer you wait for your refund. This is because the IRS must spend more time verifying the deductions and credits. This does not mean you should refrain from claiming legitimate tax deductions. Instead, just make sure to include clear documentation for each deduction.

For example, if you made a donation to a registered charity, you can deduct the dollar amount of the donation and lower your total taxable income. To make sure that the IRS agent auditing your tax return can confirm this deduction expeditiously, include the receipt. Do so with every deduction, reduce the wait time for your refund.


The IRS claims that it approves most tax refunds within 21 days of receipt of the return. However, the IRS does not issue refunds for anyone claiming earned income credit until after Feb. 15 so it has time to match the income you claim on the return with the amount reported by your employer.

If you request an electronic deposit, you receive your refund within one business week after your approval. Checks take up to four weeks to arrive in the mail.

Waiting for your refund may feel like a long time, but if you double-check your math and properly document each deduction and credit, you improve your odds of receiving your refund within the average 21 day period.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Some tax refunds in 2017 to be delayed

By Bankrate

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!


If you file your federal tax return early every year to get an expected refund quickly, you could be disappointed in 2017.

A provision in the Protecting Americans from Tax Hikes Act of 2015, or PATH Act, that became law last December will push refunds until mid-February next filing season for folks who claim the earned income or additional child tax credits.

Fighting tax credit fraud

Both the earned income tax credit, or EITC, and additional child tax credit are refundable.

This means that the credits will reduce any tax you might owe and when the credit amount is greater than your tax bill, you will get the excess as a refund.

However, many lawmakers have argued that these tax credits are frequently abused, with the IRS issuing billions in fraudulent refunds on improper EITC and additional child tax credit claims. To reduce the fraud, numerous bills have been introduced in Congress in recent years to make it more difficult to claim these credits.

Supporters of the 2 credits, which are designed to help lower-income taxpayers, acknowledge that there is some tax fraud related to the tax breaks. However, they contend that many of the improperly paid refunds are related to the credits’ complexity. People who depend on the added tax credit money need help in properly applying for the tax breaks, not added obstacles.

A compromise on the refundable credits was reached late last year in the PATH Act.

The new mandated refund issuance delay should give the IRS additional time to review and confirm that the claims are legitimate and accurate. The IRS and PATH provision supporters say the delay will help prevent, or at least reduce, the amount of money the U.S. Treasury loses each year to fraudulent credit claims based on fabricated wages and withholding.

Still available, just later

The annual tax-filing season typically begins around the third week of January. The IRS says that even with increased security procedures to fight tax identity theft and refund fraud, it usually will get refunds to taxpayers in 21 days or less.

Filing electronically and having your refund directly deposited will speed up that turnaround, says the IRS.

If you e-file, for example, on Jan. 17, 2017, then you could expect your refund to show up in your bank account by Feb. 7.

However, if next year you claim the EITC or the additional child tax credit on your Form 1040, then you’ll have to wait another 8 days for your refund.

Get your tax money now

So plan accordingly.

And maybe think about adjusting your payroll tax withholding now.

That way, you’ll get your expected tax refund amount incrementally for the next 6 months instead of letting the Bank of Uncle Sam hold your cash, interest-free, until mid-February 2017.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Slow state tax refunds upset filers

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


The Minnesota Department of Revenue warned its taxpayers back in January that new and increased measures to fight tax identity theft and refund fraud could slow their refunds.

They weren’t kidding. Two months later, folks in the Land of 10,000 Lakes are getting annoyed.

Anger growing over slow refunds

Personally, I’ve heard from some Minnesota taxpayers who are not happy with the wait. More have been heading to the Minnesota Department of Revenue Facebook page to register their complaints.

The consensus is that it’s unfair for state tax officials to hold on to the refunds when they certainly don’t allow such delays for taxpayers who owe taxes.

It sounds like there weren’t many Minnesotans in the recent Bankrate tax poll that found more than 70% of U.S. taxpayers would give the IRS more time to process returns in order to fight tax fraud.

Seriously, though, I understand the frustration, especially if you’re counting on the tax money to cover some necessary expenses. That’s what 27% of those surveyed by Bankrate said they would do with their federal refund money.

Lost state revenue to tax fraud

But I also get where Minnesota tax officials are coming from. Like Uncle Sam, states lose a lot of money every year to tax fraud.

Eventually, we all pay for that stolen tax money.

That’s why the Vermont Department of Taxes is just now getting around to distributing more than $16 million in refund claims.

The Green Mountain State held the money in February as it waited for more employer W-2 forms and other information against which the returns, and their delayed refunds, could be checked for legitimacy.

More state security checks

While Minnesota’s taxpayers are more vocal about their delayed refunds, they are not alone.

Every state that collects some form of individual income tax — that’s 43 of them, along with the District of Columbia — is experiencing refund delays due to high levels of refund fraud this tax season.

States aren’t revealing what they’re doing to catch fraudulent refunds. “If you design a new key, you don’t want to put the blueprints out there,” Verenda Smith of the Federation of Tax Administrators told Tax Notes.

A check of state tax websites, however, reveals that in order to accept or process returns, many departments are asking their filers for state-issued driver’s license info or enhanced password requirements and security questions in connection with state-authorized tax preparation software. Some are even demanding that taxpayers whose returns raise questions complete a quiz to confirm their identity.

Security paying off

Anecdotally, the efforts to cut down on stolen identity refund fraud seem to be working.

Illinois, which finally began issuing its refunds on March 1, says fraud-prevention measures implemented last year saved nearly $5 million from going to tax criminals.

Even less populated states are seeing results from their tax fraud prevention efforts.

Montana tax officials say that so far this year, they have blocked 188 fraudulent returns seeking a total of $220,245 in refunds. Last year at this point in the filing season, Montana had blocked 529 fraudulent returns seeking nearly $583,000 in refunds.

But the states are paying a price in lost goodwill.

Taxpayers express frustration over tax departments never acknowledging receipt of their state tax returns, reports Tax Notes, or getting a busy signal when phoning state tax offices.

Have you gotten your state tax refund yet? If not, has your state explained why it’s delayed? Are you in tough financial straits because of the unexpected wait?

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

‘False’ fraud filters delay IRS tax refunds

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

taxes-blog-False-fraud-filters-delay-IRS-tax-refundsThe Internal Revenue Service is walking a thin line in trying to simultaneously screen for potentially fraudulent tax returns and issue refunds to rightful taxpayers. Sometimes, says the National Taxpayer Advocate, the tax agency crosses that line, forcing hundreds of thousands of legitimate taxpayers to wait for their refunds.

The problem, according to National Taxpayer Advocate Nina E. Olson in her 2015 annual report to Congress issued Jan. 6, is a growing rate of false positives in a key tax fraud filter used by the IRS in processing returns.The Pre-Refund Wage Verification Program, referred to as “income wage verification,” or IWV, in Olson’s report, allows the IRS to temporarily freeze an individual’s refund when it detects possible false wages and withholding. That in itself is not bad. But these refund holds, says Olson, are snaring more honest filers, whose legitimate refunds are substantially delayed.

18-week wait for refund

The Taxpayer Advocate Service’s analysis of 2014 tax year filings found that nearly 180,000 legitimate filers who had their returns flagged under the IRS’ Electronic Fraud Detection System had to wait on average nearly 18 weeks before they got their refunds.

Things got worse for filers in 2015, when the IRS moved potential identity theft returns identified by the electronic detection system to the Taxpayer Protection Program, or TPP, for processing. The TPP’s false positive rate jumped from 19.8% in calendar year 2014 to 36.2% in 2015.

Making matters worse, says Olson, is that many of the affected taxpayers were unable to contact the IRS to verify their identity. At one point during the peak of the 2015 filing season, only 1 out of 10 calls got through to an IRS representative, says Olson.

The IRS also increased the testing of another application to detect identity theft or fraud, the Return Review Program. This system experienced an increase of more than 500% in erroneous refund holds.

Taxpayer Advocate helps, but still takes time

Almost 37,000 taxpayers contacted the Taxpayer Advocate Service for help in resolving the holds on their refunds in the first 9 months of 2015, according to the report. That’s a nearly 15% increase over the prior year, making it the 2nd most common reason taxpayers came to the IRS’ internal watchdog office for help.

Even with the Advocate’s help, it took an average of more than 8 weeks for these wrongful refund holds to be resolved.

Olson acknowledges that any effective tax identity theft and refund fraud screening method will result in false positives, no matter how well designed. However, she says, the high false positive rates in all of the IRS’ fraud detection programs “are unnecessarily high.”

IRS not tracking false fraud positives

More worrisome, according to the report, is that the IRS does not track the false positive rates for the IWV program, meaning it cannot determine exactly which fraud filters are stopping legitimate refunds.

Also, says Olson, “The IRS doesn’t have adequate procedures to promptly review and adjust its fraud detection filters, rules and models.”

And taxpayers whose refunds are frozen cannot reach a real person to help them resolve the problem. If a taxpayer tries to get information from the agency’s automated online Where’s My Refund? program, the filer receives a generic message prompting a call to the IRS. Even if the taxpayer does reach an IRA representative, that agent doesn’t have access to the fraud detection histories and cannot give specific responses to taxpayer inquiries.

Olson’s conclusion: Despite certain improvements in balancing fraud detection and taxpayer rights, the IRS has a ways to go.

To avoid finding yourself facing a possible tax identity theft/fraudulent refund situation that puts your real refund on hold, keep an eye on your personal data.

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Should filers be prodded to save tax refunds?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


It’s that time of year when I — and other tax specialists — nag, I mean encourage, you to adjust your withholding so that you don’t get a big refund.

Our argument generally focuses on getting that money now as part of your regular paycheck so you can use it to pay for holiday spending instead of charging those gifts and paying the bill later with your tax refund.

One group of tax experts, however, says we should instead encourage folks to save their refunds even before they get them each filing season.

Millions of refunds, billions of dollars

That’s probably a wiser approach. After all, Americans love their tax refunds from Uncle Sam. The IRS says that through Oct. 30, it had issued almost 109 million refunds that totaled nearly $299 billion.

The average federal tax refund check was $2,746.

The Refund to Savings initiative is a research project by the Center for Social Development at Washington University in St. Louis, Duke University and Intuit, the maker of the popular tax software program TurboTax.

The Refund to Savings, also referred to as R2S, looks at the taxpaying and saving behaviors of hundreds of thousands of people using a special tax software program. The software version used, TurboTax’s Freedom Edition, is available for free to individual filers and active-duty military members who meet certain earnings limits.

Based on data from those filers, the R2S believes it can help bolster individuals’ finances by suggesting these filers save their tax refunds before they actually get the money.

Savings suggested at filing time

When people complete their tax returns, note R2S researchers, the money is there, but it’s not quite in the filers’ hands. By offering taxpayers a choice to save at that key decision point, the study believes it will get more savers because the intent is still fresh and the desired option is convenient.

“When filers are asked how they want to receive their refund, we inject motivational messages, suggesting they save for emergency, retirement or another long-term goal,” Michal Grinstein-Weiss, a professor at George Warren Brown School of Social Work at Washington University, told The Wall Street Journal. “We also suggest the amount they should save.”

The IRS already gives taxpayers the option to have their refunds sent to checking, savings or retirement accounts. All you have to do is check a box on your 1040, enter the account number and the money will be directly deposited as instructed. You can even divide your refund among various accounts.

The R2S effort simply encourages such savings actions.

Suggestions for VITA filers

The effort is detailed in a recent R2S report, of which Grinstein-Weiss is a co-author, prepared for volunteer tax preparers who help filers each year at all Volunteer Income Tax Assistance, or VITA, sites. VITA workers help lower income taxpayers prepare and file their annual returns at no cost. The 2015 filing season threshold is $54,000 or less.

“If one of your VITA clients decided to save his or her refund, or even part of it, it could prevent a potential financial hardship for them and their family,” notes the R2S report. “Or, perhaps better, it could be the start that enables them to do things they may have thought they never could: buying a house or sending a child to college. Encouraging your clients to save a portion of their refund could have a profound impact in their lives.”

Refund savings for all

I believe R2S is on to something here. And it’s an approach that should be taken by all taxpayers who get refunds, regardless of income.

Everyone needs to have some cash set aside for a special goal or for emergencies that always crop up.

As long as people are using tax over-withholding and the subsequent refund amount as a forced savings mechanism, we should do all we can to ensure that the money actually does transfer to a savings account.

Do you get a refund every year? Have you ever had that refund directly deposited to a savings or other account? Have you considered adjusting your withholding so that you’ll get the money in your regular paychecks?

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.


Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.