Californians seem to get no breaks.  State income tax refunds still have not been issued to both individuals & businesses due to the State’s “Cash Flow Problems.”  That can anger many taxpayers because essentially they have given their government a loan & haven’t gotten paid back on time.  So how long do these taxpayers have to wait for tax refunds?

When Will I Get My Refund?
Both individual & business taxpayers in good tax standing will be paid when a Revenue Anticipation Note (RAN) is issued or when the treasury has enough funds.  Late filers may be subject to even further delays if their 2009 tax return was not processed by October 7th, 2010.

Why Is the State Delaying Refunds?
In short, because the State is facing major cash flow problems.  Also note that the State doesn’t want to become a debtor to individuals & businesses by being forced to issue IOUs.

Will the State Be Awarding Me Interest For the Delay?
The State should be awarding taxpayers that are entitled to but have not yet received a tax refund. Taxpayers will be awarded only if it has been over 45 days since the taxpayer filed their return in the current year. But, don’t expect the interest to be significant.  It will likely be something in the 3-5% range of the tax refund but prorated annually for each day that passes.

Any Advice to Get My Tax Refund Quicker?
Unfortunately, as of now the State has complete control over when the refunds will be sent to the taxpayers. But, you can still apply the tax refund to your estimated 2010 tax payments if you requested to do son on your 2009 tax return. In addition, if you owe any back taxes to the State then the refund will be used to satisfy those debts.

Should I Update My W-4 Form?
One of the ways to compensate yourself for not receiving your tax refund on time is to update your W-4 Form (i.e. increase allowances) so that you owe a tax bill in 2010. That way, your paychecks will be large which compensates for the unpaid tax refund. But, this is only recommended in situations in which you have a relatively small tax refund as you could potentially face penalties for owing a very large tax bill for the 2010 tax year.

More Tax Questions?

Related Articles
->Why Is My Tax Refund Lower Than I Expected?
->A Large Tax Refund Isn’t That Great. Tax Experts Explain.
->Should I Use a Debt Settlement Company Now?
->When Should I Update My W-4 Form?
->Choosing The Right Accountant For An IRS Issue
->What Are Tax Settlement Companies Really Selling?
->There Is an Error on My Tax Return