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Dividends are payments that investors can receive from stocks, exchange-traded funds (ETFs), and mutual funds. These earnings count as income and may be taxable, depending on your income and filing status.

We’ll investigate dividend tax rates and the difference between ordinary and qualified dividends.

Defining Ordinary and Qualified Dividends

The IRS divides stock dividends into two categories: ordinary and qualified. The federal tax rate is different for each category. A qualified dividend is one that qualifies for a lower tax rate based on the concept of capital gains. An ordinary dividend, meanwhile, is one that doesn’t that doesn’t qualify for a lower rate.

When a company declares a dividend payment, your dividend is ordinary if you’ve held their stock for less than 61 days over a 121-day period. If, however, you make the stock purchase on or before the date that it’s declared, and then hold it for at least 61 days, it is considered qualified.

The timing also matters. Let’s say that you own stock in Company A, and they announce that a dividend will be paid on December 1. The day before, November 30, is called the ex-dividend date, or ex-date. If you bought your shares of stock 60 days or fewer before November 30, then your dividend is ordinary. But if you bought the stock more than 60 days before November 30, your dividend is qualified.

Qualified Dividend Documentation

When it’s tax time, you’ll receive a 1099-DIV. This is the form that financial institutions use to report dividends to the IRS and relevant taxpayers. Box 1a shows the total ordinary dividends you received during this tax period. Box 1b shows your qualified dividends. The form will also show any federal or state income tax that was withheld. You can use this information plus the federal dividend tax rate to determine what you owe.

Financial institutions must issue a 1099-DIV to shareholders who receive more than $10 in dividends and other distributions for the year. For more on tax documentation, read our story on the most common types of tax forms.


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Tax Information for Ordinary and Qualified Dividends

The ordinary dividend tax rate is the same as an individual’s income tax bracket for the year.

The qualified dividend tax rate for 2023 is calculated using capital gains tax rates. This may be 0% depending on your taxable income and filing status. Here are the latest figures from the IRS:

•   Less than $44,625 for single or married filing separately.

•   Less than $59,750 for head of household.

•   Less than $89,250 for married filing jointly or qualifying widow(er).

The qualified dividend tax rate rises to 15% for the next tax brackets:

•   $44,625 to $492,300 for single filers.

•   $44,625 to $276,900 for married filing separately.

•   $59,750 to $523,050 for head of household.

•   $89,250 to $553,850 for married filing jointly or qualifying widow(er).

Once your household income exceeds the 15% bracket, you’ll pay a 20% tax rate on any qualified dividends. There may also be a 3.8% net investment income tax. Consult your accountant or financial advisor regarding your situation.

Recommended: 2023 IRS Tax Refund Dates

Dividend Tax Rate 2022

The thresholds can change by year. For example, the dividend tax rate for 2022 was as follows:

•   0% dividend tax rate:

◦   Single filers, up to $41,675

◦   Married filing jointly, up to $83,350

•   15% dividend tax rate:

◦   Single filers, $41,676–$459,750

◦   Married filing jointly, $83,351–$517,200

•   20% dividend tax rate:

◦   Single filers, $445,851+

◦   Married filing jointly, $517,201+

Dividend Tax Rate 2024

Looking ahead, we’ve got some insights into the 2024 tax year. A married couple filing jointly won’t pay taxes on qualified dividends until their income is above $94,054. Above that amount, the tax rate will be 15%. The tax raise will go up to 20 percent when a couple earns more than $583,751.

Individual filers won’t pay 15% until their income is greater than $47,025. They’ll pay 20% when income exceeds $518,901.

Recommended: Guide to Filing Your Taxes for the First Time

Why Are the Two Types of Dividends Taxed Differently?

Qualified dividends are more favorably taxed as an incentive to investors to hold onto stocks for a longer period of time. This is based on the concept of capital gains.

Additional Qualified Dividend Requirements

Besides the holding period described above, the dividend must have been paid by a corporation in the U.S. or a qualifying foreign one. Plus, the payment can’t be a dividend in name only. For example, payments given by tax-exempt agencies don’t qualify.

If a payment doesn’t satisfy all three requirements, then it can’t be a qualified dividend. It may be an ordinary dividend or another type of income.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

There are two broad types of dividends: ordinary and qualified. Qualified dividends are taxed at a lower rate than ordinary dividends. For a dividend to be qualified, an investor must hold the stock for at least 61 days during a particular time frame. A 1099-DIV will break out dividends into qualified and ordinary for the taxpayer’s information. There are three tax rates for qualified dividends. The lowest tax brackets pay nothing. The next brackets pay 15%, and the highest brackets pay 20%. Ordinary dividends are taxed as regular income.

To seamlessly track your finances, consider a spending app, which allows you to handle tasks like budgeting, paying bills, and more.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is the tax rate on dividends in 2024?

The ordinary dividend tax rate is based on your tax bracket. With a qualified dividend tax rate, it depends on your filing status and your income. The lowest tax brackets pay nothing, the middle brackets pay 15%, and the highest brackets pay 20%.

How do I calculate my qualified dividends?

Investors receive form 1099-DIV from their financial institution, which provides the amount of ordinary and qualified dividend income received during the year. The IRS also provides a worksheet.

Why are my qualified dividends being taxed?

Dividends are a type of income, and investors who receive them typically pay taxes on them. It’s true that individuals who make less than $47,025 in 2024 pay no tax on qualified dividends. However, taxpayers in higher brackets must pay 15% or 20%.

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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Form 709 is the way to report to the IRS any gifts made in the prior year that are subject to the gift tax. Don’t worry, though. Most people will never pay any taxes on gifts made over the course of their lives.

The annual gift tax exemption amount is fairly substantial; the lifetime gift tax exemption is stratospheric.

In any given year, you may give gifts under the annual threshold to an unlimited number of people and be free from filling out IRS gift tax Form 709. If you do need to report one or more gifts, again, you’re probably never going to have to pay gift taxes.

What Counts Toward the Gift Tax?

For taxpayers filing in 2024, the gift tax applies to anything worth over $17,000 that they gave another person while receiving nothing, or less than full value, in return.

Whether it’s cash, real estate, stocks, or the use of or income from property, the recipient must be able to have full and immediate access to the gift for the gift to qualify for the annual exclusion.

For gifts of over $17,000 per person, you can apply an amount you gift to the current lifetime estate tax exemption of $12.92 million (if you’re married, your spouse is allowed the same).

Gifts can include assets in any class or type of income, such as:

•   Real estate (including a down payment gift for a first home)

•   Stocks

•   Bonds

•   Digital assets

•   Cryptocurrencies

•   NFTs

•   Loans made with rates below IRS “applicable federal rates”

•   Transfer of benefits of an insurance policy

•   Student loan payments or other debt payments made for another person

Recommended: Does Net Worth Include Home Equity?

What Is the Annual Gift Tax Exemption?

For tax year 2023 (taxes filed in 2024), you could have given any number of people up to $17,000 each without incurring a taxable gift ($34,000 for spouses “splitting” gifts). That is up from $16,000 in tax year 2022.

You do not have to file Form 709 for a gift you made worth up to $17,000.

The annual gift tax exclusion rose to $18,000 per recipient in tax year 2024, and the lifetime exemption to $13.61 million per individual.


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Examples of Gift Tax Rules in Action

Let’s say you gave $117,000 to your mother in 2023 for her birthday. You would report $100,000 of the gift to the IRS, but federal tax law provides you with that unified gift and estate tax exemption ($12.92 million for tax year 2023) to offset any gift tax you may owe.

A married couple you know has three children and five grandchildren they like to shower with generosity. Each spouse may give eight gifts of $18,000 in 2024 to their family members without touching their combined $27.22 million lifetime gift tax exemption or filling out Form 709.

You want to buy a house from a family member. The sale price must equate to what it would be between strangers unless the seller provides a gift of equity — the difference between the selling price and the home’s current market value.

The relative could give you a gift of equity worth the annual exemption ($18,000 in 2024, or $36,000 for spouses “splitting” gifts) without reporting that sum to the IRS. (Another perk: Most lenders will allow the gift to count as the down payment in a non-arm’s-length transaction.) In this example, the seller must report any gift of over $18,000, or $36,000 for spouses, and apply it to their lifetime gift tax exclusion.

Recommended: How Long Does It Take to Get a Tax Refund?

Does the Giver or Recipient Fill Out Form 709?

Form 709 is filled out by the giver of the gift. The donor is also responsible for paying the tax, whether it’s when the gift was given or after the giver’s death.

However, it is possible that the recipient may have to pay the tax if the donor does not.

How to Fill Out Form 709

Understanding what each part means and how to calculate the tax can be difficult. There are a lot of rules and exceptions to understand. When filling out Form 709, getting help from a tax professional is a good idea.

Form 709 is actually called the Gift (and Generation-Skipping Transfer) Tax Return. The generation-skipping transfer tax (GSTT) exemption applies to certain gifts that skip a generation (or are transferred to anyone more than 37.5 years younger than the donor), such as a gift from a grandparent to a grandchild. It also includes trusts.

The GSTT exemption is separate from the gift and estate tax exemption.

Determine If You Are Required to Fill Out Form 709

You do not need to fill out Form 709 if you made contributions for the following reasons:

•   Payments made that qualify for the medical exclusion

•   Payments made that qualify for the tuition exclusion

•   Payments or transfers made to certain political parties or charities

•   Payments to spouses, except for gifts over $175,000 made to non-U.S. citizen spouses (for 2023) and $185,000 (for 2024)

To reiterate, gifts under the annual exclusion amount ($17,000 per person in tax year 2023) do not need to be reported on Form 709.

For couples splitting gifts, if either spouse makes a gift that exceeds the couple’s combined annual gift tax exclusion, or if each spouse makes gifts that exceed the individual annual gift tax exclusion, both spouses will need to file a Form 709, and each will need to provide consent to split gifts on the other spouse’s return.

Each gift tax return should also disclose one-half of the amount over the combined annual gift tax exemption as a lifetime gift.

Part 1: General Information

The first part to fill out is your general information, which is the same as when you’re filing taxes for the first time or you’ve been filing for years. This includes your name, address, and whether or not you elect to split gifts between you and a spouse.

Schedule A

Head to the next page to fill out Schedule A, a computation of taxable gifts, including transfers in trust.

The filer must include information about the gift recipient, a description of the gift, and the value of the gift. Reporting taxable gifts is divided into:

•   Part 1: Gifts subject only to gift tax

•   Part 2: Direct skips

•   Part 3: Indirect skips and other transfers in trust

•   Part 4: Taxable Gift Reconciliation

Schedules B, C, D

Next, fill out Schedules B, C, and D (if applicable). Schedule B is for gifts from prior periods; Schedule C is for claiming unused amounts of the exclusion for a deceased spouse; and Schedule D is for computation of generation-skipping transfer tax.

Part 2: Tax Computation

You’ll enter amounts from Schedules A, B, C, and D back on the first page of Form 709. Your tax return preparation software or professional will calculate the amount of gift tax owed.

If filing a paper return, you’ll need to use the Table for Computing Gift Tax found in the instructions.

The executor of a decedent’s estate will use Form 706 to decide whether any estate tax is owed. Form 706 is also used to compute the GSTT on direct skips.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

Understanding annual and lifetime gift tax exemptions is easy, but filling out Gift Tax Form 709 may require help from a professional. Remember that you can make an unlimited number of gifts valued at less than the annual limit and skip reporting them to the IRS.

Whether you’re logging gifts you make or figuring out what to do with your tax refund, a money tracker app can help you track your spending, debt, and investments.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Do I file Form 709 with my tax return?

Yes, Form 709 is filed with your federal tax return if you exceeded the annual gift tax exclusion.

What happens if I don’t fill out Form 709?

According to the IRS, filers who are required to fill out Form 709 but do not may be subject to penalties and criminal prosecution.

An audit could reveal a gift not reported. A generous gift might just stick out like a sore thumb. If you’re running behind, file Form 8892 by Tax Day for an automatic six-month extension of time to file Form 709 when you are not applying for an extension to file your individual income tax return.

What should I include with Form 709?

Include all gifts in excess of the annual threshold that were given during the tax year and that need to be reported to the IRS.

Do you have to file Form 709 every year?

IRS Form 709 must be filed every year that gifts worth more than the excluded amount were made. For tax year 2023, that’s any gift given by an individual that was over $17,000 in value; for 2024, it’s gifts over $18,000. Couples may “split” gifts.

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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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The earned income tax credit directly reduces the amount of income tax owed by lower-income working taxpayers. Depending on a tax filer’s number of children, tax filing status, and income, the tax credit can be in the thousands.

Here’s what you need to know about the 2023 EITC tax refund schedule and the 2024 EITC numbers.

What Is the Earned Income Tax Credit (EITC)?

The earned income tax credit, also known as the earned income credit (EIC), is a credit that low- to moderate-income workers can claim on their tax returns to reduce federal income tax owed.

Singles or married couples must have some form of earned income to qualify. Above a certain income level, they aren’t eligible for the credit. The number of qualifying children is also a key component of the tax credit.

The credit ranges from $600 to $7,430 for the 2023 tax year (taxpayers filing by April 15, 2024) and from $632 to $7,830 for 2024.

For those filing federal returns in 2024, the maximum allowable adjusted gross income (AGI) is $59,899 for a married couple filing jointly who have three or more children. Tables with amounts for the tax credit and maximum AGI are in the next section.

At the very least, the EITC reduces the amount of tax owed. At best, low-income people who have little or no income tax liability can receive the total credit in the form of a tax refund.

How Does the Earned Income Tax Credit Work?

The EITC is a fairly complicated credit, even for taxpayers who are not filing taxes for the first time. In fact, the IRS sees errors in close to 25% of tax returns claiming it. Online tax filing software can help. The IRS also offers an “EITC Assistant” calculator.

The amount of the credit depends on the tax filer’s number of qualifying children, filing status, and earned income or AGI. (AGI is defined as gross income — including wages, dividends, capital gains, business income, and retirement distributions — minus adjustments to income, which can be student loan interest, contributions to a retirement account, educator expenses, or alimony payments.)

Investment income must be $11,000 or less in 2023 ($11,600 or less in 2024).

On your tax form, the credit is filed under the “payments” section, which is a way for the credit to be directly applied dollar for dollar to any income tax you owe.

Workers receive the credit beginning with their first dollar of earned income. The amount of the credit rises with earned income until it reaches a maximum level. Then it begins to phase out at higher income levels.

Taxpayers with earned income or AGI above a certain level won’t qualify for the tax credit at all. These amounts are listed below for tax years 2023 and 2024.

Phaseout amount begins at:

•   Single, head of household, or widowed: $9,800 for no children; $21,560 with qualifying children.

•   Married filing jointly: $16,370 for no children; $28,120 with qualifying children.

Phaseout amount begins at:

•   Single, head of household, or widowed: $10,330 for no children; $22,720 with qualifying children.

•   Married filing jointly: $17,250 for no children; $29,640 with qualifying children.

💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

Who Qualifies for the EITC?

To qualify for the EITC, you must have earned income and meet certain AGI requirements.

Types of income include:

•   W-2 wages from employment

•   Self-employment (or gig or freelance) earnings

•   Certain disability benefits

•   Benefits from a union strike

•   Nontaxable combat pay

You do not have to include income from the following sources:

•   Social Security

•   Child support or alimony

•   Unemployment benefits

•   Pensions or annuities

•   Interest and dividends

•   Pay as a prison inmate

What Are ‘Qualifying Children’?

To claim a child for the EITC, a qualifying child must have a valid Social Security number, meet the four tests of a qualifying child, and cannot be claimed by more than one person.

The four tests for a qualifying child are:

•   Age: A qualifying child can be of any age if they are permanently and totally disabled; under age 19 at the end of the year and younger than you; or under age 24 at the end of the year and a full-time student for at least five months of the year and younger than you.

•   Relationship: A qualifying child can be a son, daughter, stepchild, adopted child, foster child, brother, sister, half brother, half sister, stepsister, stepbrother, grandchild, niece, or nephew.

•   Residency: The child lived with you in your home for more than half the year.

•   Joint return: The child is not filing a joint return with anyone, such as a spouse, to claim any tax credits like the EITC.

Recommended: Guide to Understanding Your Taxes

Can You Claim the EITC If You Have No Children?

It is possible to claim the EITC if you have no children, but the income threshold is very low and the credit is small.

For tax year 2023, the maximum credit is $600 for filers without children. The maximum adjusted gross income is $17,640 for taxpayers filing as single, head of household, or widowed and $24,210 for married couples filing jointly.

For tax year 2024, the maximum credit is $632. The income figures are in the table above.

Requirements include:

•   A valid Social Security number

•   Not filing Form 2555 (foreign earned income)

•   Main home is in the U.S. for more than half the year

•   Not claimed as a dependent or qualifying child on another tax return

•   You are at least 19 (or 24 if you were at least a part-time student for at least five months of the year, or at least 18 if you are a former foster child after turning 14 or a homeless youth)

There are also special qualifying rules for clergy, members of the military, and taxpayers and their relatives who receive disability payments.

Recommended: Do You Qualify for the Home Office Tax Deduction?

How the EITC Can Affect When You Receive Your Refund

Your tax refund may be delayed if you claim the EITC and file early in the year. The IRS is required to wait until mid-February to issue refunds when the EITC is claimed.

Expect a tax refund by March 1, assuming there were no issues with your tax return and you opted for direct deposit, the IRS says.

Common Errors to Avoid When Claiming the EITC

The IRS lists five snags to avoid when claiming the earned income credit.

1.    Your child doesn’t qualify: The IRS states that most errors occur because the child doesn’t meet the four requirements relating to relationship, residency, age, and filing status.

2.    More than one person claimed the child: Only one person can claim the qualifying child. If the child counts as a qualifying child for more than one person (such as separated or divorced parents), the IRS has some guidelines on how to choose which person can claim the qualifying child.

3.    Social Security number or last name doesn’t match card: The Social Security number and name must be exactly how they appear on the Social Security card.

4.    Married and filed as single or head of household: Taxpayers cannot claim the EITC if they are married and file as single or head of household.

5.    Over- or underreported income or expenses: Be sure to include all types of income from IRS Forms W-2, W-2G, 1099-MISC, 1099-NEC, and other income unless it’s one of the exceptions listed above.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

The EITC offers income tax relief for lower-income workers. If you think you might qualify, look at the EITC tax refund schedules, seek tax help if you need to, and file electronically for a speedier refund. While filing taxes isn’t most people’s idea of fun, an online money tracker can make keeping your financial house in order much easier.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

When should I expect my EITC refund?

According to the IRS, a refund with an EITC will arrive around March 1 if you filed electronically and elected for direct deposit, and there were no issues with your return. By law, the IRS cannot issue a tax refund with an EITC before mid-February.

Most taxpayers of all stripes who file electronically should get a refund within 21 days, according to the IRS.

Will there be an EITC in 2024?

Yes, there is an EITC for 2024. It rises to a maximum of $7,830 for the 2024 tax year.

Will tax refunds be bigger in 2023?

No, not in general. Many taxpayers could see significantly smaller refunds in 2023, the IRS says, thanks to the expiration of expanded tax credits that served as pandemic relief.

Photo credit: iStock/sinseeho

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Waiting for the IRS to process your federal tax return? You might be wondering how long it takes for your tax return to come back. If you file electronically, your tax return will usually be processed within 21 days. A paper return can take six weeks or longer. If you include direct deposit information, your refund will come back much faster.

If you’re concerned because your federal tax return is delayed, you can check its status online or speak to an IRS representative. Keep reading to learn what’s going on behind the scenes at the IRS with your tax return and what factors may affect when you’ll see your refund.

How Long the IRS Takes to Process Your Taxes

The main factor affecting when you get your tax return back is how long the IRS takes to process your information. Processing time will vary depending on whether you file an electronic or paper return. On average, processing for e-file returns takes less than 21 days, whereas paper returns can take more than six weeks.

If you want to get your tax refund early, it’s best to file electronically, include direct deposit information, and file early in the tax season.

💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

How Long a Tax Refund Typically Takes

Once your return is submitted to the IRS, processing can be broken down into three stages: return accepted, refund approved, and refund sent.

For electronic returns, you will typically see an email from the IRS within 24 hours confirming that your return has been accepted. For paper returns, you can expect notification in about four weeks. The acceptance stage just means the IRS has verified your personal information and checked that your dependents haven’t been claimed by someone else.

Next, the IRS will take a closer look at the information you’ve provided and either approve it or send a letter by mail asking for a correction or more information. This is the part that takes less than 21 days if you’ve e-filed.

Paper returns take longer because they must be manually uploaded by a human. Once uploaded, the information you provide can then be compared to data in the IRS system. However, submitting a paper return isn’t the only factor that can slow down a refund.

Factors That Could Slow Down Your Refund

If your return was filed electronically more than 21 days ago and you haven’t seen your refund yet, there could be a number of reasons for the delay, including:

•   The return has incorrect or incomplete information

•   Your personal info has potentially been used in identity theft or fraud

•   The child tax credit or recovery rebate credit may need to be corrected

•   The return qualifies for an additional child tax credit, earned income tax credit, or injured spouse allocation (form 8379)

•   Your bank or credit union needs additional time to post the refund to your account

If the IRS needs more information or wants a corrected return, they will contact you via mail. Many issues can be quickly resolved, especially if your finances are organized, as in a budget planner app. In the event that you owe money, the IRS will work with you to develop a payment plan. A debt payoff planner can also help you determine how you can pay your outstanding taxes comfortably and quickly.

Recommended: What Is The Difference Between Transunion and Equifax?

How to Track the Progress of Your Refund

The IRS offers two ways you can check the status of your refund: online or with a representative. An online tool called “Where’s my refund? ” allows you to check the status of your federal return. You’ll need the following information on hand:

•   Social security number

•   Filing status (Single, married–filing joint, married–filing separate, head of household, qualifying widower)

•   Refund amount

After inputting this information, you should be able to see whether your return has been accepted, processed, or sent back to you.

The IRS also has representatives who can research the status of your refund, either by phone (1-800-829-4477) or in person at a taxpayer assistance center . Note that the IRS probably won’t be able to give you much information if you e-filed less than 21 days earlier or by paper less than six weeks earlier.

As with the online checker, you’ll need to provide the representative with your social security number, filing status, and the refund amount you expect.

What to Do if Your Refund Arrives and Has a Mistake

If you receive your refund and realize there’s a mistake, you can file an amended return to correct it. Keep in mind, you can’t electronically file an amended return; you must send it by mail.

Some mistakes are identified by the IRS. In that event, you’ll receive a letter in the mail explaining the issue and how to respond.

If you’re still unsure of what to do, the IRS offers a hotline where you can ask for guidance.

•   Individual taxpayers: 800-829-1040 (TTY/TDD 800-829-4059)

•   Business taxpayers: 800-829-4933

How Long the IRS Has to Audit Your Taxes

If the IRS needs to review your tax return in more depth, you may be audited. Generally, the IRS tries to initiate audits as soon as they identify an issue with your tax return, but they may go back as far as three years. In cases where the error is substantial, they can audit up to six years of prior tax returns.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

If you file electronically, your tax return will usually be processed within 21 days. A paper return can take six weeks or longer. If you include direct deposit information, your refund will come back much faster.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

When can I expect my 2023 tax refund?

According to the IRS, nine out of 10 tax returns are processed within 21 days. To expedite the process, you can file your return electronically and include direct-deposit information. Paper returns are generally processed within 6 weeks.

How long does it take to get your tax refund direct deposit?

Most taxpayers who e-file and include direct-deposit info receive their refund in 21 days. If you submitted a paper return with direct-deposit info, you can expect your refund within 6 weeks.

How long does it take taxes to be returned?

Most taxpayers who e-file can expect refunds within 21 days. If you file via paper return, expect processing to take six weeks or more.

Photo credit: iStock/Baris-Ozer

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re expecting a refund from the IRS, you shouldn’t have to wait too long for your money. According to the IRS, it issues about 90% of refunds within three weeks of receiving your filing. Key to receiving your refund quickly are two actions on your part: using e-file and providing your bank info for direct deposit.

In fact, a directly deposited refund can show up in as little as five days.

This table shows the estimated times for receiving an IRS tax refund depending on how you file and choose to get your refund:

What Money Will Be Included In My Tax Refund This Year?

Of course, the size of your refund depends on how much you overpaid. But the average refund for individuals in 2023 was $2,753. That figure is down from 2022, when the average tax refund was $3,012.

To get your refund faster, you may want to file earlier, rather than waiting until the last minute. Typically, the tax season, when the IRS starts accepting and processing returns, starts in late January.


💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

Reasons for Your Tax Refund to be Delayed

People typically receive their tax refund two weeks after the IRS accepts their tax filing if they opt to receive a direct deposit, or in three weeks if they choose to get a check in the mail. But if you’re still waiting after that point and wondering where your tax refund is, here are a few possible reasons for the delay:

•   If anything in your return is incomplete or incorrect, the IRS may need to give the return further review before sending you a refund check. In this case, you may get a notice from the IRS in the mail with instructions for fixing or completing your tax return. It may take up to four months for the IRS to process returns that require extra handling. The sooner you respond to the IRS request for information, the sooner your return will be processed.

•   If you are claiming the Earned Income Tax Credit or Additional Child Tax Credit, there may be a delay in receiving your tax refund. The IRS is required to hold any tax returns for people claiming those two tax credits until mid-February. This hold will show up in the “Where’s My Refund” tool on the IRS site if it applies to you.

•   Your bank or credit union may take more time to post a refund to your account. The time for posting IRS refunds varies from institution to institution.

Recommended: IRS Tax Refund Dates and Deadlines

How to Use the ‘Where’s my Refund’ Tool on the IRS Site

The IRS has a “Where’s My Refund” tool on irs.gov where anyone can check and see the status of their tax refund. It can also be accessed using the IRS2Go mobile app. If you submit your tax return electronically, you can easily check on the status of your refund online within 24 hours of filing. If you mail your tax return, it will take about a month or longer for any information about refunds to show up on the IRS site.

In order to access your refund information on the IRS website, you will need to input your social security number, tax filing status, and the dollar amount that you expect to receive on the return. Double check your information before submitting it: If the wrong social security number is entered, this could result in an error, extra identity verification steps, and even a delay in receiving your tax refund.

What Do the IRS Tax Return Statuses Mean?

There are three different IRS tax return statuses that you will see when you use the Where’s My Refund tool. Here’s what they mean:

Received

Once the IRS has received a return, it is marked as received. You can check to see if your return has been received using the “Where’s My Refund” tool on the IRS site.

Approved

Once the IRS processes a tax return and there are no errors or missing information, it is marked as approved. At that point, the process of sending a refund by mail or direct deposit can begin.

Sent

When the IRS mails out a refund check or sends a direct deposit refund, the tax return status is marked as “sent.”


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

How to Contact the IRS About Your Tax Refund

It’s best to wait at least 21 days after filing your return electronically, and six weeks after mailing your return, to contact the IRS by phone. At that point, you can call the IRS refund hotline at 800-829-1954.

Recommended: 41 Things to Do With Your Tax Refund

The Takeaway

Knowing when you’ll receive your tax refund can be helpful if you’re planning to use the money to pay off debt, create a budget, or save for a big purchase. Filing your return electronically and opting to get your refund via direct deposit will allow you to get your return quickly, typically within three weeks. A money tracker app can help you manage your finances, including your refund, and track your spending and savings.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How quickly will I get my refund?

Most refunds are sent within three weeks of the IRS receiving a tax filing, but it can sometimes take longer, especially if you mail your return or opt to get your refund by check through the mail.

It’s been longer than 21 days since the IRS received my return and I haven’t gotten my refund. Why?

Sometimes the IRS needs to manually review tax returns if they are incomplete, have errors, or if fraud is suspected. Also, if a taxpayer claims certain tax credits, such as the Earned Income Credit or Additional Child Tax Credit, his or her return may take longer to process.

Will calling help me get my refund any faster?

Calling may help you track where your refund is, but it won’t necessarily help you get it faster. Wait at least 21 days after filing your return electronically, and six weeks after mailing your return to contact the IRS by phone. You can call the IRS refund hotline at 800-829-1954.

Photo credit: iStock/rez-art

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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