Here's What Happens When Your Tax Refund Is Delayed

If you file your taxes and realize you owe the IRS money from the previous year, you're required to send in your payment by April 15, or whatever the official tax-filing deadline is (it's sometimes a bit later than April 15th if that date falls on a weekend). If you're late submitting your tax payment, you're required to pay the IRS interest and penalties on that sum -- even if you're only late by a matter of days.

But what if the IRS is late paying you your refund? Does the IRS have to pay you interest, and does the agency get penalized in some way?

The answer to the second question is no. Penalties apply to taxpayers only. But in some cases, the IRS may have to pay you interest on your tax refund if it's delayed to a substantial degree.

It's a matter of circumstances

It typically takes the IRS 21 days to issue a refund following receipt of an electronically filed tax return. However, there are certain factors that can delay a tax refund. These include:

• A tax return that contains errors, like the wrong Social Security number or missing information
• A tax return with the wrong bank account information for direct deposit
• A tax return that's submitted on paper (these commonly take longer to process than electronic returns)

The IRS isn't responsible for paying interest on tax refunds that are delayed to a mistake on your part. But if your tax return is error-free, then the IRS is obligated to issue your refund in a reasonable amount of time, defined as 45 days.

If the IRS doesn't issue your refund within that time frame, then the agency is required to pay you interest on your overdue refund. Usually, that interest is calculated starting from the day the IRS received your return.

Better yet, if the IRS owes you money for an overpayment on your part in 2023, and your refund is delayed, the interest rate the agency will be subject to is 8% through September of this year. So while you may want your tax refund as soon as possible, a delayed refund may actually put a nice amount of extra money in your pocket.

How to check on the status of your refund

If it's been more than 21 days since you submitted your taxes electronically, you may be eager to find out what the status of your refund looks like. And there's an easy way to go about that.

Just use the IRS's "Where's My Refund" tool. To get an update, you'll need:

• Your Social Security number
• Your tax-filing status
• The exact amount of your refund

This system should give you an update as long as it's been 24 hours since you submitted your taxes electronically. But if you filed your return on paper, you may need to wait four weeks to get an update.

All told, the IRS usually does its best to issue tax refunds quickly. But if your refund is delayed through no fault of your own, you may get some extra money from interest as a result.