Does Tax Refund Come in Two Payments? Reasons and What to Do

Tax refunds are eagerly anticipated by taxpayers as a return of overpaid taxes. However, there are cases where refunds are issued in multiple payments rather than a single lump sum.

Potential Reasons for Multiple Refund Payments

Receiving a tax refund in multiple installments can be confusing, but this often stems from specific financial or regulatory circumstances.

Debt Offsets

One common cause of split refunds is debt offsets. The U.S. Department of the Treasury’s Bureau of the Fiscal Service manages the Treasury Offset Program (TOP), which allows federal and state agencies to collect overdue debts by redirecting tax refunds. If you owe child support, student loans, or back taxes, part of your refund may be applied to these debts, with the remaining balance issued separately. The IRS or the agency involved typically notifies taxpayers of the offset and its reason.

Separate Processing of Credits

Claiming multiple tax credits can also result in staggered payments due to varying processing times. Refundable credits like the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) are subject to additional scrutiny to prevent fraud. Under the Protecting Americans from Tax Hikes (PATH) Act, refunds involving these credits cannot be issued before mid-February, giving the IRS time to verify eligibility. If other parts of your refund are processed earlier, you may receive your refund in installments.

Corrections to the Return

Errors on a tax return can lead to adjustments and split refunds. If the IRS identifies issues such as inaccurate income reporting or miscalculated deductions, they may issue a partial refund while resolving the discrepancies. These corrections often result from mismatches with third-party information, like W-2s or 1099s. Once resolved, the IRS releases the remaining refund. Review any IRS correspondence detailing adjustments, and consult a tax professional if you disagree with the findings.

Timing Considerations

The timing of tax refunds can vary, especially if they are distributed in multiple payments. The IRS generally begins processing returns in late January, issuing most refunds within 21 days for electronic filers. However, refunds involving the EITC or ACTC are delayed until mid-February under the PATH Act to allow verification of claims.

Paper returns typically take longer, up to six weeks or more. Filing method and return complexity, such as itemized deductions or multiple credits, can also extend processing times. Holidays and weekends may further delay the IRS’s schedule.

What to Do if the Second Payment Is Delayed

If your second payment is delayed, check the status using the IRS “Where’s My Refund?” tool or the IRS2Go mobile app. These platforms provide updates on processing and can clarify whether additional documentation is needed. Review any IRS notices for details on the delay and required actions.

For unexplained delays, contact the IRS directly at 1-800-829-1040. Have your Social Security number, filing status, and refund amount ready. To minimize wait times, avoid calling during peak periods near tax deadlines.

Delays may also occur due to identity verification requirements. If you receive a notice requesting verification, follow the instructions promptly. Be prepared with documents such as your prior year’s tax return and current W-2s to confirm your identity.