The 2022 tax season is officially starting on Jan. 24. That's when the IRS will start accepting and processing tax returns for the 2021 tax year.
If you're expecting smooth sailing, National Taxpayer Advocate Erin M. Collins recently warned of deep concern about the upcoming filing season when she issued her annual report to Congress (tinyurl.com/3r6ztuua). The national taxpayer advocate is the head of the Taxpayer Advocate Service, an independent organization within the IRS that represents taxpayers.
Why the concern? And what can taxpayers do to avoid potential problems?
In late December 2021, the IRS said it still had a backlog of 6 million unprocessed individual returns (Forms 1040) for the year, along with more than 2 million unprocessed amended individual returns.
As many of you wrote to tell me last year, calling the IRS to find out what was going on with your tax returns proved to be frustrating. Last year, according to Collins' report, the IRS received about 282 million phone calls, with customer service representatives answering roughly 11% of them (approximately 32 million calls). Also, for those who were able to reach an IRS representative, the IRS reported that hold times averaged 23 minutes.
Given these struggles, what does a taxpayer need to know this year to hopefully get the best results?
Know the tax deadline: This year, your tax return must be filed by April 18, 2022, due to the Emancipation Day holiday on April 16 in the District of Columbia. Taxpayers in Maine and Massachusetts have an additional day (April 19) for their deadline, due to the Patriots' Day holiday April 18. (However, you may file to request an extension to Oct. 17, 2022.)
Check your mail: Those who received advance Child Tax Credit (ACTC) payments or an Economic Impact Payment (EIP) in 2021 will want to watch for letters from the IRS containing information that can help prevent delays. Letter 6419 is for the ACTC, while Letter 6475 is for the EIP. You can also check online for information about your ACTC payments (tinyurl.com/3865zf2k) and your EIP payment (tinyurl.com/43be4p3h).
How important is it to have the right numbers? Collins' report noted that the Recovery Rebate Credit (RRC), which was used to claim missing EIPs on tax returns, led the IRS to issue more than 11 million math error notices in 2021 due to discrepancies over RRC figures when compared with IRS records.
Choose electronic filing: IRS Commissioner Chuck Rettig, in announcing the opening of tax filing season, said: "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."
To file electronically, you can access the IRS's Free File program as of Jan. 14. It provides online tax preparation at no charge through a public-private partnership. According to the IRS, Free File can be used by any person or family who had an adjusted gross income of $73,000 or less in 2021. (Returns using Free File before Jan. 24 will be officially "filed" on Jan. 24. More details can be found at tinyurl.com/5ysyvhkc.)
The IRS said it anticipated that most taxpayers this year "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." More than 160 million individual tax returns for the 2021 tax year are expected to be filed, according to the IRS.
To see the problems encountered by taxpayers last year, take the time to read Collins' list of the 10 most serious problems at tinyurl.com/3s7vmyvd. The National Taxpayer Advocate 2022 Purple Book, which offers 68 legislative recommendations to "strengthen taxpayer rights and improve tax administration," is at tinyurl.com/53k3xwpj.
While IRS processing is not in your control, how you prepare your tax return is.
Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (firstname.lastname@example.org). Please visit www.juliejason.com.
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