The 2025 tax season officially kicked off on Monday, with the Internal Revenue Service (IRS) starting to accept and process individual income tax returns at 9 a.m. This early initiation might offer taxpayers an opportunity to receive their refunds as soon as February, provided they file promptly. However, several factors can affect the timing of these refunds, particularly for those claiming the earned income tax credit.
Challenges Facing the IRS
This year’s tax processing introduces its own set of challenges. The White House has imposed a hiring freeze at the IRS, which may extend beyond those affecting other federal agencies. This freeze will remain until the Treasury Secretary, in collaboration with the Director of the Office of Management and Budget and other officials, deems it necessary to lift it. The implications of this freeze could significantly impact the IRS’s ability to efficiently manage the influx of tax returns.
Recently, former President Donald Trump hinted at reallocating some of the nearly 90,000 new IRS agents to border control, suggesting a rethinking of tax enforcement priorities. He expressed this sentiment during a rally in Las Vegas, indicating his potential to dismiss IRS employees funded under the Inflation Reduction Act. Trump’s remarks echo concerns raised by some lawmakers, such as House Committee on Ways & Means Chairman Jason Smith, about the perceived adversarial role the IRS may take towards middle-class families and small businesses.
Interestingly, IRS Commissioner Danny Werfel, who recently joined the agency with plans to stay until 2027, has announced his resignation effective January 20, 2025. In his statement, Werfel revealed that after careful consideration, he believes the best course of action for a smooth transition is to step down. As tax season progresses, many people are eagerly awaiting their tax refunds, with a significant number of returns already submitted electronically.
Tax Filing Trends
Typically, tens of millions of tax returns are filed during the first week of tax season. For context, last year over 15.3 million federal income tax returns were filed by February 2. During that same period, the IRS issued 2.6 million refunds amounting to nearly $3.65 billion. It’s estimated that more than 140 million individual federal income tax returns for the 2024 tax year will be filed ahead of the April 15 deadline. Notably, less than half of taxpayers are expected to file independently this year, with many opting for the assistance of tax professionals.
Common Questions About Your Tax Refund
Why Is Your Refund Delay Occurring?
Many taxpayers are curious about delays in receiving their tax refunds. The anticipated timeline may not align with expectations due to the subsequent processing of returns once submitted. Following the IRS’s acceptance of e-filed returns on Monday, any prior submissions would be marked as “pending.”
For instance, Matt Hetherwick of the Accounting Aid Society noted that while their services commenced earlier, actual processing by the IRS begins only post-acceptance day. Notably, tax software providers like TurboTax hold early submissions securely until the IRS opens for e-filing, subsequently transmitting them to ensure they are among the first reviewed upon system rollout.
Setting Realistic Expectations for Refund Arrival
If you’ve filed early, it’s essential to maintain realistic expectations regarding refund timelines. Federal income tax refunds typically may take anywhere from eight to 15 days to process after a return is accepted, especially if you e-file and choose direct deposit. However, it’s crucial to recognize that delays can happen.
In summary, while the commencement of the 2025 tax season brings opportunities for early filers to expedite refunds, several complexities and changes within the IRS may affect overall processing times. As the season unfolds, staying informed and aware of potential delays can ensure a smoother filing experience.
Don’t miss IRS Announces 2025 Tax Updates: What You Need to Know
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