New York residents who are facing financial challenges likely are eager to receive their income tax refunds from Uncle Sam. Those extra dollars can be used to pay bills, reduce credit card debt, or even splurge on something special. But some taxpayers may not receive their refunds when expected. In some cases, receipt may be delayed. In other cases, if the taxpayer owes back taxes, is behind in certain other payments, or is in Chapter 13 bankruptcy, he or she may not receive a refund at all.
Generally, the IRS issues most refunds, about 90 percent of them, within three weeks after receiving the taxpayer’s income tax return. There are a few reasons why it may take longer, such as an error on the return or a failure to include a proper form. The quickest way to get your money is by requesting that it be directly deposited to your bank account. The money will come about five days sooner than if you request a check to be mailed.
If you owe back taxes or are behind on your student loan or child support payments, you may not get your refund. In those cases, the IRS likely will apply your refund to your debt. If you are in Chapter 13 bankruptcy, the IRS will direct the refund to the bankruptcy trustee, who will then decide whether it will be used to pay your unsecured creditors, cure any delinquencies in your payment plan, or given to you.
Perhaps the best course of action if you are in Chapter 13 bankruptcy is to decrease the withholdings from your wages so you do not have a refund. When you over pay your taxes and use your refund as a kind of savings account, you lose the ability to use the funds as you see fit. Another option is to work with a qualified bankruptcy attorney to establish a repayment that does not count your annual refund as part of your disposable income.
Source: Fox Business, “Where’s My Refund?,” Bonnie Lee, March 21, 2013by