NORFOLK, Va. - Tax season is upon us, but if you're thinking about filing early you may need to hold off for a bit.
Vivian J. Paige, who is a local CPA and professor at Christopher Newport University, said it's because you may not have all of your paperwork yet.
Paige said the IRS letters don't need to be sent out until January 31. However, when they do come you'll need to know what you're looking out for. Notably this year: the Advanced Child Tax Credit Payments and the Economic Impact Payments. The amount of the third-round Economic Impact Payment was based on the income and number of dependents listed on an individual's 2019 or 2020 income tax return. The amount of the 2021 Recovery Rebate Credit is based on the income and number of dependents listed on an individual's 2021 income tax return.
Paige said to double check what you receive because the IRS announced this week that some of the paperwork sent out was incorrect. This points to internal problems within the agency.
According to a press release on the agency's website, "as of late December, the IRS had backlogs of 6 million unprocessed original individual returns (Forms 1040), 2.3 million unprocessed amended individual returns (Forms 1040-X), more than 2 million unprocessed employer's quarterly tax returns (Forms 941 and 941-X), and about 5 million pieces of taxpayer correspondence – with some of these submissions dating back at least to April and many taxpayers still waiting for their refunds nine months later."
While these statistics are higher than in years past, Paige said "the IRS backlog that you've heard about is 6 million in paper returns that have not been processed. So filing electronically is the way to go."
Still, the IRS said they are working around the clock, trying to deal with staffing issues from COVID-19 and the desperate need for funding.
Senator Mark Warner echoes these concerns which is why he has reached out directly to the Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig.
In a letter he wrote, "I appreciate the IRS’ efforts to address the significant backlog of unprocessed returns, and recognize the significant challenges the agency has faced in operating during the pandemic while implementing major programs such as the stimulus payments and the Advance Child Tax Credit payments. However, persistent delays harm taxpayers who are waiting for their returns to process – often those who need their refunds most – and the agency has an obligation to implement a clear plan that alleviates this backlog while avoiding major delays for the processing of filed returns during the 2021 tax filing season.”
The big takeaways as tax season begins:
- Read your paperwork carefully
- File electronically, if you can
- Ask questions if you are confused
- File by the April 18 deadline