Why is my refund delayed this year?

UPDATED for tax season 2020 (as of Jun 2021)

If you haven’t yet received your IRS refund, there’s unfortunately nothing to do but sit back and wait. Trust me that you’re in the same boat as a lot of people. The IRS refund backlog/delay in 2021 (for tax year 2020) continues to be an issue for millions and millions of people. I’ve never seen anything like it.

What it boils down to is this: The IRS has to strike a balance between paying out refunds quickly, and giving themselves sufficient opportunity to prevent fraud before paying out refunds to fraudsters. The IRS’s automated fraud prevention techniques have become quite sophisticated in recent years, but if they can’t rely on computers to do that work (such as when Congress changes major aspects of tax law in the middle of tax season, giving the IRS zero time to engineer and test software updates), then the IRS has to rely on “manual” processing. And that’s what’s causing the vast majority of refund delays this year.

If your refund is delayed, it’s almost certainly not because the IRS suspects you of fraud! It’s most likely due to your being eligible for a tax credit or deduction that didn’t exist before tax year 2020, and for which the IRS had insufficient opportunity to design and test automated fraud prevention strategies. This includes:

  • additional 2020 stimulus (“recovery rebate credit”) payments
  • exclusion of unemployment benefits from taxation
  • non-repayment of (ineligible) health insurance premium subsidies.

There are others, but those are the big three. Claiming any of those will likely put you in line for manual processing. And until you get to the front of that line, you’re going to have to wait for your refund.

(I’m very sympathetic to the IRS’s situation this year. I wouldn’t want to be in their shoes! However bad this past tax season was for me as a tax preparer, it’s been far worse for the IRS. The amount of new work that Congress threw at them this past year — in terms of way-beyond-the-last-minute tax law changes, plus the entire stimulus program and the new advance child tax credit program — after years and years of budget cuts, in the face of striking amounts of fraud, and in the middle of a pandemic that has severely impacted the IRS’s typical workflow … I wouldn’t want to have been the one to have to manage all of that! Congress set the IRS up for failure. And most people will unfortunately blame the IRS for it rather than Congress. It’s not the first time, but it’s the first time I’ve ever seen it this bad.)