Why is My Refund Chopped Into Two (or More) Payments?

tax tips, your tax return | March 08, 2019 | By Susannah McQuitty

An illustration of federal and state tax returns

“Filing your taxes” sounds like a standalone process, so it may come as a surprise that some people actually have to file two different income tax returns each year: one for federal taxes and one for state taxes.

Technically, some people won’t have to worry about the state part, since not every state imposes an individual income tax (you can see if your state has an income tax here). But where do you land?

Let’s talk about federal and state taxes and why they may cause your refund to come in separate parts.

Two separate tax returns

First, if you live in a state that collects taxes on income, you’ll most likely have to file two tax returns (your federal return and your state return).

Your federal return is for national income tax, and almost everyone in the country who receives some type of income has to file a federal return; your state return, on the other hand, reports on income taxes specific to that jurisdiction, so it’s entered on a separate tax return.

But wait—there’s more! If you moved to a different state or worked in one or more states, you’ll probably need to file multiple state tax returns. Some state tax laws are more complicated than others, which is why we have a team of Certified Public Accountants (CPAs), Enrolled Agents (EAs), and tax experts who work year-round to make sure that you can e-file any state tax return through 1040.com.

If you live or work in a state that collects income taxes, make sure that you file both your federal and state returns.

A graphic depicting the tax return processing system

Two separate processing times

Since there are two separate tax returns, two different agencies will be receiving and processing those returns. The IRS processes the federal return, and your state’s tax agency—many times referred to as the Department of Revenue (DOR) or Department of Taxation—takes care of the state return.

That may sound like a bit of useless trivia: Why on earth would you need to know who processes what? Well, knowing that each is processed by different groups can help explain why one return may take less time to be accepted than the other.

Most of the time, your federal return will be accepted before your state return, though that’s not always the case. What’s always true is this: The sooner your returns are accepted, the sooner you’ll get any refunds you’re owed.

Two separate refunds

Since you’re filing two different tax returns, you’re also getting two separate refunds.

It may catch you off guard if you’re expecting a total refund of $1,500 and you only get a check for $1,200 from the IRS. Your state refund is on a totally different processing schedule, though, so that $300 coming from your state may just take a little more time.

Unfortunately, some state refunds may take weeks longer to process. Annoying as they may be, those delays serve a purpose: With each passing year, states are cracking down on security more than ever, which means that many state refunds are being delayed to help protect taxpayers from tax-related identity theft and refund fraud.

Want to finish both fast? File with 1040.com

Wouldn’t it be nice if you could just file both at the same time and be done with it? Okay, spoilers: You can when you file with 1040.com. We guide you through your federal return first, and then we auto-complete any state returns with as much info as we can.

All you have to do is finish any other information your state needs, and you can file both your federal and state returns in one click. Does that go for California? What about North Carolina? New York? Yes, yes, and yes to anywhere you may need to file a state return. We support all states, giving you a true one-stop shopping experience. That’s just another way we keep taxes smart and simple, so sign up or log in and finish your federal and state tax returns with 1040.com!

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