IRS Sets Filing Season Start Date
The IRS recently announced that the 2021 tax filing season will officially begin Monday, January 24, 2022. This is the date the agency will begin accepting and processing 2021 returns, after having taken some time to program and test their systems to make sure they run as smoothly as possible (keep your fingers crossed).
In a statement released by the agency, IRS Commissioner Chuck Rettig emphasized the importance of having all information you need to file a complete and accurate return before submitting your return. "The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don't face processing delays. Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year. And we urge extra attention to those who received an Economic Impact Payment or an advance Child Tax Credit last year. People should make sure they report the correct amount on their tax return to avoid delays," stated Rettig.
Like last year, there will be people who normally are not required to file a tax return, but who nevertheless will need to file one to claim a Recovery Rebate Credit refund for situations where they are entitled to more of credit than the 2021 stimulus payments they received. They also may need to file to reconcile advance payments of the expanded Child Tax Credit or receive other credits to which they are entitled, such as the Earned Income Credit.
Now, likely you have heard of, and maybe been affected by, the problems the IRS has had the last two tax filing seasons largely due to Covid-19 restrictions, including major delays in processing tax returns and in issuing refunds. These problems have been exacerbated by late tax law changes, some applying retroactively to the tax filing season that already had started, as well as confusion over-reporting and reconciliation of tax credits for which advance payments were sent out, such as the stimulus payments.
Unfortunately, while improved somewhat, the log jam still continues on the eve of another filing season. But there are things you can do to help facilitate the filing process and hopefully avoid being stuck in seemingly endless IRS phone call hold times or over-lengthy processing times.
For one thing, before calling the IRS for information or guidance, try using the IRS online resources first. "Our phone volumes continue to remain at record-setting levels," Commissioner Rettig said. "We urge people to check IRS.gov and establish an online account to help them access information more quickly. We have invested in developing new online capacities to make this a quick and easy way for taxpayers to get the information they need."
Additionally, the IRS has a variety of other free options available to help, ranging from free assistance at Volunteer Income Tax Assistance and Tax Counseling for the Elderly locations across the country to the availability of the IRS Free File program.
A second wise move is to file your return electronically and if entitled to a refund, use direct deposit to receive it rather than waiting on a paper check. This could speed things up dramatically assuming the return is accurate. Bear in mind that if the return is incomplete or contains errors, it could require further review that slows the process and refund.
And finally, make sure you have all the information you need before filing your return. This year, that could include information in addition to the normal tax reporting statements you are used to receiving, especially if you received the third Economic Impact Payment (i.e., stimulus payment) and/or the advance Child Tax Credit payments issued in 2021.
The IRS started sending Letter 6419, 2021 Advance Child Tax Credit, in late December 2021 and continues to do so into January. The letter contains important information that can help ensure the return is accurate. People who received the advance CTC payments can also check the amount of the payments they received by using the CTC Update Portal available on IRS.gov.
Eligible taxpayers who received advanced Child Tax Credit payments should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive advanced Child Tax Credit payments can claim the full credit by filing a tax return.
The IRS will also begin issuing Letter 6475, Your Third Economic Impact Payment, in late January to individuals who received a third payment in 2021. 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. People can also use their IRS online account to view their Economic Impact Payment amounts.
Both letters include important information that can help you 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. Use of this information when preparing a tax return electronically can reduce errors and avoid delays in processing.
Lane Keeter, CPA, is Office Managing Partner of the Heber Springs office of EGP, PLLC, CPAs & Consultants (a full-service financial firm with offices in Heber Springs, North Little Rock and Bryant) and past winner of The Sun-Times Reader's Choice Award for Best Accountant
