Will Taxes Be Deposited on Presidents Day?

As tax season approaches, many individuals eagerly anticipate their tax refunds. With Presidents Day being a federal holiday, taxpayers may wonder how this might affect the timing of their deposits.

Banking Operations on Federal Holidays

Federal holidays like Presidents Day disrupt banking operations across the United States. Most banks close, halting in-person transactions and limiting services. These closures align with the Federal Reserve’s holiday schedule, which suspends operations on designated days. As a result, transactions such as direct deposits are postponed until the next business day.

The Federal Reserve’s payment systems, including the Automated Clearing House (ACH) network, do not operate on federal holidays. This means ACH transactions, such as direct deposits, are delayed until the system resumes. For taxpayers expecting refunds via direct deposit, this can push the deposit date back if it coincides with a holiday.

While the IRS may release refunds on a federal holiday, the actual deposit into a taxpayer’s account will be delayed if banks are closed. Taxpayers should account for this when planning their finances around refund dates.

IRS Refund Release Procedures

The IRS processes millions of refunds annually. After a taxpayer submits their return, the IRS verifies its accuracy by cross-referencing reported income with W-2 forms and other documentation. Advanced algorithms and databases ensure compliance with tax laws and flag discrepancies or potential fraud.

Once verified, the IRS calculates the refund, factoring in applicable credits or deductions. Refunds that include the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) are issued after mid-February to combat fraud. For the 2024 tax year, the maximum EITC for families with three or more children is $7,430.

The IRS uses the Modernized e-File (MeF) system to speed up electronic return processing, often resulting in refunds being issued within 21 days of acceptance. Direct deposits are faster, while paper checks take several additional weeks due to mailing times.

Direct Deposit vs Check Delivery

Choosing between direct deposit and check delivery impacts the timing and security of tax refunds. Direct deposit is faster and more secure, depositing funds directly into a bank account. The IRS encourages this method to minimize risks like lost or stolen checks. In 2024, over 90% of refunds were issued via direct deposit, reflecting its efficiency.

Direct deposit also allows taxpayers to split refunds among up to three accounts, such as checking, savings, or even purchasing U.S. Savings Bonds. This flexibility supports financial planning, enabling immediate allocation of funds. Taxpayers can also apply part of their refund to future tax liabilities, which may be useful for those anticipating taxes owed in the next year.

Paper checks, while tangible, come with risks and delays. Delivery through the postal service can be unpredictable, subject to weather, logistical issues, or theft. Additionally, cashing a check often requires a bank visit or check-cashing service, which may involve fees and further delay access to funds.

Monitoring Refund Progress

Tracking refund progress is essential during tax season. The IRS provides a tool, “Where’s My Refund?” on its website and mobile app, IRS2Go, to help taxpayers monitor their refunds. It tracks refunds through three stages: return received, refund approved, and refund sent. Updates occur daily, reducing the need for frequent checks.

Understanding these stages helps taxpayers manage expectations. The “return received” status confirms that the IRS has begun processing. “Refund approved” indicates the review is complete, and the refund amount is finalized. Finally, “refund sent” confirms the funds are on their way, either by direct deposit or check. This transparency helps taxpayers plan their finances effectively.

Potential Federal Holiday Delays

Federal holidays can delay tax refunds, especially for those relying on direct deposits. Banks and the Federal Reserve suspend operations during these holidays, postponing transactions. Once operations resume, backlogs may extend delays beyond the holiday itself.

Taxpayers can minimize delays by filing their returns early, giving the IRS more time to process the return and release the refund before a holiday. Additionally, submitting returns well before the April 15 deadline avoids peak processing times, which often slow down refunds. Planning ahead can help taxpayers receive their refunds without unnecessary delays.