Treasury Department officials have warned that this year’s tax season may be challenging once the IRS starts processing tax returns on Jan. 24. Last year’s processing delays affected nearly 30 million taxpayers, who had their returns and refunds held up by the IRS, according to a published news report.
Tax experts Mark W. Everson, vice chairman at Alliantgroup and former commissioner of Internal Revenue at the IRS, and Christian Cyr, a CPA and president, and chief investment officer at Cyr Financial, along with the IRS have offered some crucial tips that could help avoid a refund delay, CBS News reported.
The IRS believes that taxpayers who file electronically will have their returns processed faster than those who file paper returns. The IRS electronically processes returns filed by taxpayers, according to the department. Paper returns must be processed manually.
According to the Taxpayer Advocate Service data, approximately 10,000,000 people filed paper tax returns in 2021.
However, tax experts urge taxpayers to join approximately 138million taxpayers who already use efiling, according a report.
Taxpayers can also get their refunds quickly by direct deposit. Direct deposit is a combination of e-filing along with direct deposit. The money will be sent directly into your bank account. Direct deposit was chosen by approximately 87million of the 95,000,000 people who received refunds last fiscal year.
According to the IRS, taxpayers who choose direct deposit and file electronically will receive their refund within 21 business days.
They advise taxpayers not give estimates or guesses, but to review their forms before they submit them. Also, ensure that their data is correct. They said even a minor discrepancy on the form can be flagged for manual review, which can delay your tax return weeks or even months.
The IRS is informing those who received the third federal stimulus check-in 2021, as well as the Child Tax Credit payments, to hold onto those documents since they are required by the agency when filling out the tax form.
According to Mark W Everson, taxpayers made mistakes in reporting their 2020 stimulus payment amounts on their returns, resulting in their tax filings getting flagged for manual review, which was one of the factors that contributed to last year’s major delay.
Through the end of the month, the IRS will be sending out two letters taxpayers need to look out for: “Letter 6419,” informing taxpayers of their advance CTC payments, which started going out in December and will continue through January, and “Letter 6475,” which relates to the third stimulus check. They will be sent by the agency in January.
The tax experts suggest keeping both letters and to refer to them when completing your tax return.
Lastly, certain credits taxpayers are claiming may hold up their tax return. The IRS can’t issue refunds that involve the Earned Income Tax Credit or Child Tax Credit after mid-February. This is partially done by the PATH ACT law that was established in 2015. It was designed to protect taxpayers and IRS from tax-related fraud based upon the PATH ACT.
The agency said that even for those taxpayers who file on Jan. 24, if their tax return involves either of those tax credits mentoned, they still might not receive a refund within the 21-day time frame.