Travis H. Long, CPA, Inc. Blog

Originally Published in the Pacific Grove Hometown Bulletin

April 20, 2011

So you filed your returns on time and you are now waiting for your refund to arrive – but when?  Hopefully you have taken advantage of modern technology by e-filing your tax returns and requesting direct deposit – not only does this ensure your information is communicated faster and more accurately to the taxing authorities, but it also puts money in your pocket in less time.

Federal

The IRS has an e-file refund cycle chart available online that will tell you the day your check will be deposited or mailed depending on when the return is electronically transmitted and accepted.  Generally, it will take one to two weeks for direct deposit or two to three weeks for a paper check.  If you mailed your returns, it could take up to six weeks before you hear the jingle in your pocket.  If you go to www.irs.gov and click on “Where’s My Refund,”( on the right-hand side of the page) you can enter in your social security number, filing status, and refund amount to determine the exact status of your refund.

California

California refunds are typically paid out within seven to 10 days if you e-filed, or eight weeks if filed by paper!  Like the IRS, the FTB has a similar online tool to check the status of your refund.  This tool is available at www.ftb.ca.gov/online/refund/index.asp.

What about same-day or next-day refunds?

You have probably heard radio or television ads advertising tax preparation services that can get you a refund almost immediately.  This is not what is really happening.  No tax preparer or discount chain has a special connection with the IRS or the FTB.  The preparer typically teams up with a bank to loan you the money in anticipation of your refund.  These are almost always high-interest and high-fee short-term loans and are rarely in your best interest.  The tax preparers and the banks funding your “refund” are the ones who usually benefit.

There has been a lot of scrutiny and lawsuits regarding these loans over the past several years.  One major chain in California settled a lawsuit in 2009 for nearly $5 million due to the deceptive and pricey structure of these products it was offering to taxpayers.    These refund anticipation loans are often likened to pay-day loans and generally should only be used as a last resort in an emergency.

The best way to avoid the need for one of these loans is to ensure you are e-filing with direct deposit and to do better planning during the year by adjusting your withholdings or estimates if there are changes to your tax situation.  If you are unsure how to handle this on your own, you may wish to consult with a tax professional.  The other option is to just be patient and wait for the refund to come for free!

Travis H. Long, CPA is located at 706-B Forest Avenue, Pacific Grove, CA.  Travis can be reached at 831-333-1041