Three-quarters of all Americans receive an annual tax refund from the IRS, which is often a family’s largest check of the year. But with this tax season now open, taxpayers could see a repeat of last year’s snarl in the process, when approx.got their returns – and repayments – held up by the IRS.
Treasury officials warned Monday that this year’s tax seasonwith the IRS beginning to process returns on January 24th. This is largely due to the IRS’s significant backlog of returns from 2021. Per. As of December 31, the agency had 6 million unprocessed individual returns – a significant reduction from a backlog of 30 million in May, but far higher than the 1 million unprocessed returns that are more typical around the start of the tax season.
It may make taxpayers nervous about delays in 2022, but most Americans should get their reimbursement within 21 days of filing, according to the IRS. And some taxpayers already report having received their refund, according to social media posts.
But there are some reservations about the 21-day window to get a refund. Claiming the tax deduction or child tax deduction will slow down your tax return due to rules designed to prevent fraud, but this means that people claiming these credits and submitting their statements on January 24 or close to this date may will not receive their refund until early March, the IRS said.
And other issues can lower your repayment, such as errors like math problems or incorrectly stating how much you received from the advanced Child Tax Credit payments. In these cases, your tax return may be marked, which can lead to delays of weeks or even months.
The IRS said Monday that tax returns with errors involving the third stimulus control, which lacks information, or which is suspected of fraud or theft, can take up to 90 to 120 days to resolve.
Some taxpayers may also inadvertently claim the wrong amount on their tax returns this year – and without their own fault. The IRS said Monday that some of its Child Tax Credit Letters – Letter 6419 –about the amount some taxpayers received. The IRS asks taxpayers to refer to the letter when filling out their tax return.
But if that happens, taxpayers’ returns may not match what the IRS has recorded, leading to the returns being marked – and delays in having their returns processed and their refunds sent to them, said Larry Gray, a CPA and government liaison officer. for the National Association of Tax Professionals.
“People may not be aware that the letter may be incorrect, and what is the IRS doing to send out a follow-up message to stop creating a major backlog in the coming season?” he said at a conference call to discuss tax professionals’ concerns about the current tax season.
If all goes well, taxpayers who e-file can receive their refund via direct deposit as soon as one week after filing based on previous years’ processing time, according to for professional publication CPA Advisor. It is important to note that processing time typically decreases as the tax season begins and the IRS handles multiple returns, it is noted.
Meanwhile, tax experts say there are some steps taxpayers can take to ensure a quick tax refund, which is even more important this year as the IRS starts with a backlog. Last month, National Taxpayer Advocate Erin M. Collins issued a report to Congress, who warned she is “deeply concerned about the upcoming application season” given the backlog, among other issues.
“The first thing you know, if you’re going to make a meal, you’ll have to clean up the kitchen from the last meal,” said Mark W. Everson, vice president of Alliantgroup and former IRS commissioner. “It’s just snowballing into a horrible situation.”
Delays in processing tax returns count as one of the agency’s most pressing issues, Collins said in his report, which.
“Weeks and weeks” with IRS delays
Although the IRS says most refunds will be sent within 21 days, experts warn that delays are likely, noting that the agency is still working through 2020 tax returns.
During the 2020 fiscal year, the IRS processed more than 240 million tax returns and issued about $ 736 billion in reimbursements, including $ 268 billion in federal stimulus payments, according to the latest IRS data. During that period, about 60 million people called or visited an IRS office.
Donald Williamson, an accounting and tax professor at American University in Washington, said he expects “weeks and weeks” of IRS delays in 2022. “My advice in 2022 is to file early, get started tomorrow and try to put your tax together with a qualified professional. “
To reinforce the challenge, tax officials told CBS MoneyWatch that it is still difficult to reach IRS staff on the phone. The IRS answered only about 1 in 9 taxpayer calls during fiscal year 2021, Collins reported. “Many taxpayers do not get answers to their questions and are frustrated,” she noted.
“Back in the old days, you waited 5-10 minutes and got an IRS agent on the phone,” said Christian Cyr, a CPA and president and chief investment officer at Cyr Financial. But now, he said, his CPAs are waiting hours to talk to an IRS employee, with no guarantee of ever reaching one.
It is very much at stake to ensure smooth tax reporting as the average repayment last year was around $ 2,800. Below are tips from tax experts and the IRS on how to get a tax refund within 21 days of filing.
1. Archive electronically
This is a step that the IRS strongly encourages this year. Although some people simply like to file paper returns – and others can have no choice – The agency says that taxpayers who file electronically are more likely to have their reports processed quickly.
This is because the IRS relies on computers to electronically process submitted returns, while paper returns must be handled by human employees. In itThe IRS closed its offices and employees stopped opening mail – delaying the processing of paper returns.
Even apart from staffing constraints due to the pandemic, IRS personnel have not kept pace with population growth. The agency’s workforce is now the same size as it was in 1970, despite the fact that the population grew by 60%. This means that fewer workers can handle a larger amount of returns.
About 10 million people submitted paper returns last year, or about 7% of the 148 million reports filed in 2021, according to data from the taxpayer’s law firm. Tax experts urge people to join the roughly 138 million taxpayers who already use e-filing.
“Paper is the IRS’s kryptonite and the agency is still buried in it,” National Taxpayer Advocate Collins said Wednesday.
2. Get a refund via direct deposit
The IRS also recommends that taxpayers make sure they get their refund by direct deposit. The agency says the fastest way to get your money is to use the combination of e-filing with direct deposit, which sends the money into your bank account.
About 95 million people received repayment last year, of which about 87 million opted for direct payment. Most taxpayers who file electronically and opt for direct deposit will receive their refund within 21 days, provided there are no return issues, according to the IRS.
3. Do not guess
The IRS checks its data against the figures that taxpayers state on their returns. If there is a discrepancy – let’s say your W2 shows that you earned $ 60,000 but you write on the return that you earned $ 58,000 – the return is marked for manual review by an employee.
When this happens, it is likely that your tax return will face a delay of weeks or even months. This is why tax experts advise people to check forms carefully to make sure they are reporting data accurately. Filling out your tax return should not rely on “word of mouth or honor system,” Cyr said. “I guarantee it will cause delays.”
4. Save IRS Stimulus Letters, CTC
In that direction, the IRS is sending letters this month to taxpayers who received the third federal stimulus check in 2021, as well as the advanced.
These letters will inform each taxpayer of what they received through these programs in 2021 – they are important documents to stick to because you will be referring to these amounts when filling out your tax return.
A major reason why tax returns were delayed in 2021 was that taxpayers made mistakes in reporting their 2020 stimulus payment amount on their returns, which resulted in their tax returns being marked for manual review.
“Do not have any problems caused by your own negligence,” advised Everson.
However, due to the incorrect CTC letters sent to some taxpayers, the IRS advises taxpayers to double check how much they have received by logging into their accounts at IRS.gov.
The IRS sends two letters:
- Letter 6419 – informing taxpayers of their prepayments to CTC. The agency began sending these letters in December and will continue to do so in January.
- Letter 6475 – on the third stimulus control. That letter will be sent in late January.
Save both of these letters and see them when you fill out your tax return, tax experts said.
You may be subject to a delay if you claim these tax deductions
There are a few issues that can cause delays even if you do everything correctly.
The IRS notes that it cannot issue a refund involving Earned Income Tax Credit (EITC) or Child Tax Credit before mid-February. “The law provides this extra time to help the IRS stop fraudulent repayments from being issued,” the agency said this week.
This means that if you file as soon as possible on January 24, you may still not receive a refund within the 21-day time frame if your tax return involves one of these tax deductions. In fact, the IRS informs those claiming these credits that they will most likely receive their refund in early March, provided they submitted their returns on or after January 24th.
The reason relates to a 2015 law which delays repayments for people claiming these credits, which were designed as a measure to combat fraudsters who rely on identity theft to get taxpayers’ reimbursement.
—With reporting from the Associated Press.