You work hard for your money, so it can be difficult to see a chunk of it sucked up in taxes.
It’s also not fun to see the government take more than they need only to give it back to you the following year. But if you know exactly what to expect when it comes to getting every dollar back that you deserve, that’s a great place to start.
If you are eligible for a tax refund, then this post is for you. To help get your finances in order (in prep for tax season), check out the free tools on Personal Capital. It helped me in 2019.
- The tax deadline for your 2020 tax return is Thursday, April 15, 2021 (there’s no extension this year due to the COVID-19 Pandemic)
- Your 2020 taxes can be filed starting February 12, 2021
- If you are an early filer, your tax refund may be delayed in 2021
When Are Taxes Due For The 2020 Tax Year?
Taxes are due by Thursday, April 15, 2021.
Employers are required to issue W-2s prior to January 31, but 1099s may not arrive until February.
The IRS will start accepting and processing returns for individual tax return filers on February 12, 2021. While you can file sooner, your return will not be processed until after the system officially opens.
In fact, the IRS advises that even if you use tax-filing software ahead of tax season, filers shouldn’t eFile until after the 12th, when the IRS has officially opened the system.
Learn more about filing your taxes with our complete Federal Income Tax Guide.
When To Expect A Tax Refund In 2021?
The big question on our minds is, “When will I get my money?”.
The fastest way to get your tax refund is to have it electronically deposited into your financial account. This is a free service.
Most taxpayers who eFile should expect to get their tax refunds in less than three weeks from the date the IRS received and approved their tax filing.
The IRS actually doesn’t put out a calendar, but rather just states that most people should be getting their refund within that 21 days.
On the other hand, if you file by mail, it can take up to 12 weeks to get your refund.
So the bottom line is that it will take about three weeks from the time your taxes have been filed. However, there are some exceptions.
What about state tax refunds?
Typically, your state tax refund can take up to 30 days to get back to you if you file electronically. But, like federal tax refunds, if you file a paper tax return, it can take up to 12 weeks (three months!) for your refund to arrive – not surprising knowing how snail mail works.
If you’re wondering where your state tax refund is, you can either contact your state tax agency or check the Department of Revenue’s website for your state.
Where’s My Refund?
The above standards are helpful guides, but to track your exact refund, use the IRS’s Where’s My Refund? tool after your federal return has been filed and accepted.
This tells you where in the process your refund is and when you can expect it. This way, you won’t have to be in the dark about when your money will arrive.
Again, the fastest way to get your tax refund is to file electronically (IRS eFile) and have the funds deposited directly into your bank account. Interestingly, you can use this option to deposit your refund into up to three different accounts.
Direct deposit returns are common. About eight out of ten taxpayers get their refunds through direct deposit. When direct deposit and e-filing are combined, the IRS issues more than nine out of ten refunds in less than 21 days.
Will 2020 Tax Refunds Be Delayed in 2021?
If you claim these credits at the start of the tax season, you can expect your refund as soon as the first week of March if you file electronically, sign up for direct deposit, and there are no issues with your tax return.
Why this weird law? What’s the point?
The goal of this is to lessen the prevalence of fraud. The extended hold gives the IRS time to review each of these returns carefully.
2018 and 2019 experienced many credit attacks on large institutions. We found the best way to ensure that your credit is safe, is to monitor it early and often.
Tax Factors that can Impact Your Refund Amount
Family With Children
A family with kids will see the same tax credits for 2020 as they did in 2019. The credit per child under age 17 by the end of 2020 will be $2,000. There is also a $500 credit for other dependents who do not qualify for the $2,000 child tax credit.
Both credits phase out with an income of $200,000 for single taxpayers, or $400,000 for those married filing jointly.
Standard Deduction Increase
Individual taxpayers will get a slightly larger standard deduction in 2020, increasing to $12,400 for singles – up from $12,200 for 2019 – and $24,800 for married filing jointly – up from $24,400 in 2019.
Itemized Deductions And Lower Tax Liability
If you have itemized deductions on your return, you’ll probably see fewer deductions, which in turn lower your tax liability (tax debt owed by an individual). This is especially true if you live in a state with high property taxes.
If you have investment accounts, you will no longer be able to deduct the fees associated with those accounts.
Before the Tax Cuts and Jobs Act, you were allowed to deduct fees from custodial or investment accounts (trust admin fees, investment management fees, etc.) if they exceeded two percent of your Adjusted Gross Income. Now, those can no longer be listed as deductions.
So if your IRA is quickly growing and you want to have it for the long run, you may want to think about paying the fees out-of-pocket. Doing this means the money in your IRA will keep growing and still be tax-deferred.
Donations And Charity
If you are a generous person and list your donations to charity on your tax return, listen up. If your giving is less than the standard deduction, you could think about making 50-100% more donations in 2021 to surpass the deduction threshold for next year’s tax filing. Then you can itemize those donations and increase your refund amount.
Obviously, not everyone can afford this. But if you can, it may be a smart move.
Lower Tax Liability For The Self-Employed, S Corps, and Partnerships
If you’re self-employed or have a partnership or S-Corp, you may have a lower tax liability this tax season.
This could lead to a bigger refund for you because the tax reform allows for a 20% business income deduction for those who qualify, known as the Qualified Business Income (QBI) deduction.
It also nearly doubles the amount that a small business can list as an expense for business equipment.
Because of the tax reform legislation, you’ll need to file a new Form W-4 with your employer if your life situation changes or if you get a new job. Your employer will most likely be aware of these changes, too, and should be alerting you of any necessary steps on your part. Also, you should definitely check with your tax advisor, or the IRS website, if you still have questions.
What should I do with my tax refund?
If you are building up your emergency fund, a high yield savings account is a great place to have your tax refund deposited.
IRS Refund Schedule In 2021 (Tax Year, 2020)
Below is an estimated 2021 IRS refund schedule (2020 Tax Year) based on previous tax refund schedules released by the IRS. As we mentioned before, typically those who both e-file and request refunds through direct deposit will get their refund the fastest.
|2021 IRS Refund Schedule Estimates (2020 Tax Year)*|
|Filing Date||Earliest Refund Date*||Latest Refund Date*|
|February 12||February 22||March 5|
|February 19||March 1||March 12|
|February 26||March 8||March 19|
|March 5||March 15||March 26|
|March 12||March 22||April 2|
|March 19||March 29||April 9|
|March 26||April 5||April 16|
|April 2||April 12||April 23|
|April 9||April 19||April 30|
|April 15||April 25||May 6|
*Note: These are estimated dates based on previous tax refund schedules released by the IRS. Due to auditing processes, the IRS no longer publishes tax refund schedule charts. Refunds may be delayed this year due to the pandemic. These dates also assume returns are filed electronically with no errors. Paper returns may take a lot longer this year due to pandemic-related staffing issues.
IRS Refund Schedule Summary
That was a lot of information to get through. But the main things to remember are:
- Taxes are due Thursday, April 15, 2021.
- If you are eligible for a refund, you can anticipate your refund about 21 days after you e-File your return.
- If you file by mail, it can take up to 12 weeks to get your refund.
- For state tax returns, you should expect to wait up to 30 days to get your refund.
- If your federal tax return includes the Additional Child Tax Credit (ACTC) or the Earned Income Tax Credit (EITC) and you file early, your refund may be held until the first week of March.
- The new tax reform legislation may result in refund changes for some taxpayers.
If you have any questions, let us know in the comments. Although, depending on your specific situation, you may need to speak with your tax advisor.