IRS Encourages e-File and Direct Deposit
The IRS kicked off the 2022 tax filing season by encour- aging taxpayers to e-file and request a direct deposit for their refunds. At a news conference, IRS Commissioner Chuck Rettig said: “This could be a very frustrating fil- ing season for both taxpayers and tax professionals.” He noted that the IRS still lacks the resources to meet the needs of taxpayers. He emphasized three steps taxpayers should take:
- File electronically
- File accurately
- Request a direct deposit of refunds.
Note: The IRS has not yet finished processing paper tax returns for 2020. Some taxpayers who filed paper tax re- turns for 2020 with a balance due are receiving CP80 let- ters from the IRS showing a credit balance and claiming that the IRS has not yet received their tax return. In oth- er words, the IRS cashed the check but has yet to pro- cess the return, even though the check was in the same envelope as the paper tax return. A problem that could have been avoided had the return been e-filed.
The IRS expects more than 160 million individual tax returns for the 2021 tax year to be filed, most before the April 18, 2022 tax deadline. Rettig noted that taxpayers need to take special care this year due to several criti- cal tax law changes that took place in 2021 and ongoing challenges related to the pandemic.
“IRS employees are working hard to deliver a successful 2022 tax season while facing enormous challenges relat- ed to the pandemic,” Rettig said. “There are important steps people can take to ensure they avoid processing delays and get their tax refund as quickly as possible. We urge people to carefully review their taxes for ac- curacy before filing. And they should file electronically with direct deposit if at all possible; filing a paper tax re- turn this year means an extended refund delay.”
For most taxpayers who file a tax return with no issues, the IRS anticipates they will receive their refund with- in 21 days of when they file electronically if they choose direct deposit—similar to previous years. Last year’s av- erage tax refund was more than $2,800.
Special care for EIP, advance Child Tax Credit recipients
The IRS also encourages caution to those people who received a third economic impact payment or advance Child Tax Credit in 2021. Taxpayers should ensure the amounts they’ve received are entered correctly on the tax return. Incorrect entries when reporting these payments mean the IRS will need to further review the tax return, creating an extensive delay. To help taxpayers, the IRS is mailing special letters about the stimulus payments and advance Child Tax Credit payment amounts. People can also check the amount of their payments in their Online Account available on IRS.gov.
Earned Income Tax Credit or Additional Child Tax Credit refunds
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.
Avoid phone delays; online resources best option for help
IRS.gov is the quickest and easiest option for help. IRS assisted phone lines continue to receive record numbers of calls, more than the agency can handle with its limited resources. Avoid delays: check IRS.gov first for refund information and answers to tax questions. Establishing an Online Account on IRS.gov can also help taxpayers get information quickly. The Online Account feature has recently been expanded to allow more people to gain access.
2020 tax return still being processed? Tips to help with filing 2021 tax return
For people whose tax returns from 2020 have not yet been processed, they can still file their 2021 tax returns. For those filing electronically in this group, here’s a critical point. Taxpayers need their Adjusted Gross Income, or AGI, from their most recent tax return when they file electronically. For those waiting on their 2020 tax return to be processed, make sure to enter $0 (zero dollars) for last year’s AGI on the 2021 tax return.
Note: Or wait and file an extension for 2021 until the IRS finishes processing their 2020 tax return. Entering incorrect information seems like a recipe for inviting more letters from the IRS.