How Federal Refunds Work in the United States of America

The most common example to explain how federal refunds work is when a company makes corporate tax payments to the IRS. Generally, a company or business must make estimated income tax payments if it expects to owe $500 or more when filing its return, but also if its taxes were not zero in the previous year.

For instance, if your company had taxable profits and paid income taxes for the fiscal year 2023, it will likely need to pay estimated corporate income tax in 2024. This will apply to your future corporate tax filing, which has a deadline in April 2025.

Once the company has completed the 2024 filing and has the final numbers, the difference between the estimated payments and the final income tax payment could either be in favor of the company or against it. If it is in favor, you could receive a refund; if not, you will need to pay the difference for your 2024 filing to the IRS.

Where can my company check if it has a refund in the USA?

If you identify that the company could have a refund, you can check it directly on the IRS website or vía the IRS mobile app. You will need your Social Security or Individual Taxpayer ID, filing status, and the refund amount. All this information can be found in the corporate income tax forms shared by your tax advisor.

Track Your Refund

You will see your refund status 24 hours after you have e-filed your current income tax return. This could change if you file a paper return or if your filing is for previous years. The processing time for these options ranges from 3 days to 4 weeks.

When will my refund arrive?

Keep in mind that the time to process the refund, meaning to release it to your company’s bank account, usually takes 21 days for an e-filed return. It could take 4 weeks for amended returns sent by mail or longer if your company needs to make corrections or additional reviews to the filing.

Recommendations for Federal Tax Refunds in the USA

It is important for companies to adjust their payments each year by accurately estimating earnings and expenses. We recommend creating budgets for each period to approximate income tax payments as closely as possible. If you need advice on estimated payments, refunds, and other related issues, please do not hesitate to contact us.

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