This year, it’s more important than ever to get your taxes in order sooner than later. The IRS has admitted that it is still backed up and struggling to process returns. This is due to ongoing effects of the COVID-19 pandemic and the resulting staffing shortages, according to a January 10 article in Government Executive. Even the six weeks the IRS states as an expected turnaround time for returns not filed digitally is likely to be overly optimistic.
By the way, the IRS already started accepting 2021 returns on January 24. So, if you haven’t file yet, then those who have already filed are already ahead of you in line!
Tips for making filing easier
If you’re expecting a refund this year, or have other incentives for having your 2021 returns processed sooner than later, here are some tips for at least trying to speed up the process:
• Make sure you gather all the necessary numbers, documentation, and forms for your tax-related activity during 2021. If you haven’t already received a W-2 for wages earned or 1099s if you received money as an independent contractor or from other non-salary sources, now is the time to track them down. You or your accountant will need everything in hand to finish the return.
• For federal individual tax forms and instructions, go to irs.gov. Of course, you can also use the IRS site for the latest tax information, including how to reconcile advance payments of the child tax credit or claim a recovery rebate credit for missing stimulus payments.
• You may want to look into Form 1040-SR (available for seniors born before January 2, 1957) if you think it might be relevant. Your tax professional can explain, if needed.
• If at all possible, file your tax return electronically. Your accountant can do this on your behalf as long as you authorize them to do so by signing a Form 8879. It’s on this form that you will share the direct deposit numbers the IRS will use for issuing you your refund.
Filing Deadlines
The IRS might not be able to keep up with the workload on time, but that doesn’t mean they’ll forgive taxpayers for being late. Make note of the dates that are relevant to your specific tax situation listed below.
January 14
IRS Free File opened. Free File allows you to file your federal income tax return online for free if your adjusted gross income (AGI) is $73,000 or less using tax preparation and filing software provided by IRS tax software partners. Even if your AGI exceeds $73,000, you can use IRS’s Free File Fillable Forms. These are downloadable forms that you fill in and then submit online. Check the IRS.gov website for details on both options.
January 24
As mentioned above, the IRS began accepting and processing individual tax returns for 2021 taxes.
April 18
Deadline for filing 2021 tax returns (or requesting an extension) for most taxpayers. The 18th is the Monday following the more traditional April 15th deadline.
April 19
If you live in Maine or Massachusetts, you get an extra day to get your taxes done, because of the Patriots’ Day holiday there.
October 17
If you end up filing an extension, then this is your new deadline for your 2021 taxes. Keep in mind that, as always, if you actually owe additional taxes, any penalties and interest will have started on the original April 18 date (or the following date for Maine and Massachusetts.)
Awaiting processing of previous tax return?
The IRS is so far behind in processing last year’s returns that, depending when yours were filed, they may not have been fully processed yet. This does not mean that you need to wait until that happens to file your 2021 return.
Tax Refunds and Filing Methods
If you expect to receive a refund, make sure to file as soon as possible. If you file electronically, the IRS is hoping to issue a refund to you within 21 days of receiving your return. As mentioned above, as long as the IRS has your current banking information, your tax refund will be delivered via direct deposit. Of course, make sure to update your banking information with the IRS if it has changed since the last time you utilized electronic filing. In general, the IRS encourages people to use e-filing and avoid sending paper tax returns if at all possible.
The Takeaway
Chances are you’re using the services of a tax professional who will ensure that you “get your ducks in a row” as soon as possible this year. Keep in mind that, they, too, are extremely busy during tax season. So, the sooner the better, whether you’re doing your own taxes or not.
Disclosure
This communication is for informational purposes only and should not necessarily be regarded as legal, tax or customized financial advice or comment or as an official statement of the firm, or any agents thereof.
