No one enjoys doing taxes, but everyone loves getting a refund — and the majority of taxpayers get one.
According to the Internal Revenue Service (IRS), over 80 percent of tax returns result in a refund. With the average refund totaling $2,815, it could be the largest windfall you receive all year.
If you want to track your refund’s status, the “Where’s My Refund?” IRS tool can be invaluable. Once you understand how to use it, you can find out when your refund will arrive and create a plan to use it.
How tax refunds work
Although you may think of a tax refund as free money, it’s actually a no-interest loan you made to the government.
If you’re like most taxpayers, you filled out a W-4 form when you started your job. That form determines how much of your paycheck is withheld for federal and state taxes and Social Security.
If you didn’t claim enough allowances for your situation, you might end up overpaying your taxes. During tax season, the surplus you paid to the government is returned to you as a tax refund after you file your return.
If you receive a big refund year after year, some financial advisors suggest adjusting your W-4 withholdings so less is taken out of each paycheck. With that approach, you’ll have more money each month to use in other ways, such as investing or saving for retirement.
However, some people are more comfortable receiving a refund. They worry about underpaying their taxes and facing a big tax bill in April. It’s a good idea to talk to a tax professional about your own situation to identify what works best for you.
Where’s my IRS refund?
When you file your tax return and find out that you’ll receive a refund, you’ll have the option of signing up for direct deposit. If you opt for direct deposit, the IRS will deposit your refund directly into your checking or savings account.
However, you might wonder when that money will appear. Thankfully, the IRS launched a service to make tracking your refund easier and more convenient.
The “Where’s My Refund?” IRS tool can be accessed online to check on your return — even if you didn’t file your taxes electronically. Whether you completed your return yourself, used a tax preparation software, consulted a professional, or submitted your return in the mail, the “Where’s My Refund” tool will still work for you.
You can start tracking your return 24 hours after e-filing your taxes or four weeks after you mailed in your return. The IRS updates its data daily, so check back often to see its progress.
Using the ‘Where’s My Refund?’ IRS tool
If you plan on accessing the “Where’s My Refund” tool on your computer, you can do so by visiting IRS.gov/refunds.
On the IRS’ refund page, you can find information and answers to common questions. When tax season begins, the site will also have a link to the refund tracker.
To check on your refund, you’ll need your Social Security number, filing status, and exact refund amount — no guessing or estimates.
Once you have that information, click on “Check My Refund Status” on the right side of your screen. The site will prompt you to enter your information before displaying the status of your refund. It will tell you if the IRS is still reviewing your return, or if your refund has been issued.
If you prefer to check on your refund while you’re on the go, the IRS also allows you to do so from your smartphone. The IRS2Go app is available for both Android and iPhone users. You can also make payments and find free tax preparation sites and answers to your tax questions through the app.
How accurate is the IRS refund tracker?
Depending on when you file, it can take weeks before the IRS reviews your tax return and sends out your refund. The IRS reports that it issues 90 percent of tax refunds in less than 21 days.
After the IRS has reviewed your return, you will receive a personalized disbursement date. Although that date is a good guideline for when to expect your funds, the agency can’t guarantee its accuracy. There can be service disruptions or delays that affect the timing of your refund.
For example, if you filed for certain tax credits, such as the Earned Income Tax Credit (EITC), the IRS might take more time to review your return than it spends on others.
Your refund can be a great windfall, but you shouldn’t rely on it arriving on a certain date to pay your bills or expenses. Instead, wait to make big purchases until the refund is in your bank account.
Using your tax refund wisely
When you see your refund arrival date on the “Where’s My Refund?” IRS tool, it’s easy to get excited and start planning on splurges. Although a vacation or a shopping spree can be tempting, you can maximize your refund by using it to meet your financial goals, such as opening up a retirement account or making extra payments on your student loans.
If you’re not sure how to use your newfound money, check out these smart ways to spend your refund.