Treasury Department officials recently issued a statement warning taxpayer’s that the upcoming tax season, which begins on January 24 and will run through April 18, will be messy and delays should be expected. Pointing to staffing shortages and paperwork backlogs, officials said taxpayers will likely face frustrations like those of last year’s tax season. Potential problem areas include delays in the processing of refunds and returns as well as difficulty in reaching IRS.
As of mid-November 2021, the IRS had a backlog of roughly 8.6 million tax returns left to process. In a separate statement, IRS Commissioner Charles Rettig said the IRS is not able to provide the level of service taxpayers deserve and said that more resources for the agency are essential.
Additionally, only approximately 7% of callers to account-management lines at the IRS were able to reach a live human, according to the midyear report, which National Taxpayer Advocate Erin M. Collins compiled. Taxpayers calling the IRS phone line for with their Form 1040 for tax returns (the most frequently called IRS helpline, according to the agency), only 3% of callers reached a representative.
In light of the challenges mentioned above, we have compiled these 3 tips to help you achieve a successful tax filing season:
1. File Electronically
To avoid delays in processing, the IRS recommends that people avoid filing paper returns wherever possible. Electronically filing is faster, easier and more accurate than filing a paper return. E-file makes compliance with reporting and disclosure requirements easier by eliminating the need to make copies, assemble all of the appropriate schedules and attachments, and paying for postage
2. Choose Direct Deposit for Refunds
Overall, the IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically if they choose direct deposit and there are no issues with their tax return.
By law, the IRS cannot issue a refund involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February, though eligible people may file their returns beginning on January 24. The law provides this additional time to help the IRS stop fraudulent refunds from being issued.
3. Watch for Letters About Advanced Child Tax Credit and Third Economic Impact Payments
The IRS started sending Letter 6419, 2021 advance Child Tax Credit, in late December 2021. The letter contains important information that can help ensure the return is accurate.
The IRS will also begin issuing Letter 6475, Your Third Economic Impact Payment, to individuals who received a third payment in 2021 in late January. While most eligible people already received their stimulus payments, this letter will help individuals determine if they are eligible to claim the Recovery Rebate Credit for missing stimulus payments. If so, they must file a 2021 tax return to claim their remaining stimulus amount.
Both letters include important information that can help people file an accurate 2021 tax return. If the return includes errors or is incomplete, it may require further review while the IRS corrects the error, which may slow the tax refund. Using this information when preparing a tax return electronically can reduce errors and avoid delays in processing.
Click here for more information regarding IRS Letter 6419
Click here for more information regarding IRS Letter 6475
Click here for the IRS Child Tax Credit Update Portal
Click here to create your IRS Online Account
Fleming Advisors, LLC offers tax, accounting & advisory services to businesses and individuals. For more information, visit our website or call us at 855-877-9807.
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