IRS warns Americans to prepare for refund delays, confusion this tax season — here are 3 headaches you can avoid by filing ASAP

For millions of households, that money goes toward bills, emergency savings or debt payoff. When refunds get delayed, it can trigger late fees or force families to rely on expensive credit while waiting.

Which means many Americans need their refund in hand as soon as possible. If that includes you, here's what to know about three major IRS headaches, and how to protect yourself.

Workforce reductions are slowing down service

The IRS workforce has shrunk dramatically. The agency began 2025 with approximately 102,000 employees but ended the year with around 74,000 — a 27% reduction affecting nearly every department. Customer service representatives, who handle over 100 million phone calls annually, numbers dropped by 22% last year (2).

The agency has resorted to temporarily reassigning employees from areas like HR and IT to answer calls and help with processing, despite some having no direct tax experience, according to Axios (4).

That means if your return hits a snag, getting help will take significantly longer. The IRS has already lowered its phone service target by 15% from last season, down to 70% this year (4).

What you can do: File electronically and choose direct deposit. The IRS typically processes e-filed returns within 21 days (5), while paper returns can take six to eight weeks. Triple-check your math, Social Security numbers and bank routing information before submitting to avoid delays requiring IRS intervention.

New direct deposit requirements could freeze refunds

Starting this filing season, the IRS is phasing out paper refund checks. If you file without direct deposit information, the agency will freeze your refund and send a notice requesting bank account details. If you don't respond within six weeks, they’ll eventually mail a paper check, which adds unnecessary delay.

This, Collins notes in her report, will disproportionately impact the millions of vulnerable Americans who are unbanked, underbanked or living with disabilities. In the U.S., about 6% of households are unbanked, meaning they lack a traditional checking or savings account (6).

What you can do: If you don’t have a bank account, now’s the time to open one. Many banks and credit unions offer free checking accounts with minimal balance requirements that can help you avoid refund delays and eliminate check-cashing fees. If you must receive a paper check, request an exception through your IRS online account or by calling IRS customer service.

Tax code overhaul creates confusion

The One Big Beautiful Bill Act made over 100 changes to the tax code, many of which apply retroactively to 2025 returns (7). While some provisions expand deductions — including breaks for seniors, tip income, overtime pay and car loan interest — they come with complex eligibility requirements.

Consider the auto loan interest deduction, which allows up to $10,000 annually. To qualify, your vehicle must be new, purchased for personal use and assembled in the U.S. The loan must come from a standard lender. You'll need to include the VIN and ensure the vehicle weighs less than 14,000 pounds. And the deduction phases out once your modified adjusted gross income exceeds $100,000 for single filers or $200,000 for married couples (6).

These rules increase the likelihood that returns will be flagged for manual review. With reduced staffing, the IRS can't handle the volume as quickly as before.

What you can do: If you're claiming new deductions, read IRS guidelines carefully before filing. Consider using reputable tax software updated for 2026 rules, or consult a credentialed tax professional. Verifying eligibility requirements is better than facing months-long delays or potential audits.