A chaotic tax filing season may be on the horizon. On Wednesday, in a detailed report given to Congress, the National Taxpayer Advocate indicated that this year’s tax season may face multiple issues. These include setbacks with processing returns and possible refund delays. Internal Revenue Service tax lawyers are on hand to help individuals who anticipate tax problems with back taxes.
Although any California IRS tax attorney is probably aware that the IRS plans to accept returns starting January 24, even early filing doesn’t guarantee smooth sailing. Ms. Erin M. Collins, from the National Taxpayer Advocate, stated that she had deep concerns about this year’s tax season. As of December 2021, unprocessed individual tax returns totaled over 6 million, and amended individual tax returns topped out at 2.3 million. This type of backlog is virtually unprecedented.
A multitude of taxpayers were still without their refunds nine months after filing their returns. Tax relief measures in the form of extended deadlines were put in place due to the pandemic. However, a funding crisis and lack of staff at the IRS headquarters ultimately led to major problems for filers.
Tips for Avoiding Delays
The IRS and Bay Area tax attorneys are urging taxpayers to file their returns online as quickly as possible to avoid processing delays and ensure their refunds are received at least in a somewhat timely manner.
Making sure the return is accurate and does not need to be amended is also of vital importance. Filers who owe back taxes or have other complications with their return should certainly seek the advice of a tax lawyer when filing.
Other tips include choosing direct deposit over a paper check, as this is also a good way to expedite the refund process.
Economic Impact Payments May Muddy the Waters
IRS Commissioner Charles Rettig indicated that those who received the advanced child tax credit or an economic impact payment in 2021 should be especially careful. Last year, millions of e-filed returns were delayed due to various discrepancies, including 11 million that had math errors. The latter had to be processed manually, which greatly delayed the process.
Recovery Rebate Most Common Problem
The most frequently noted problem seen by the IRS during 2021 concerned the recovery rebate credit. This credit was used by those who claimed they hadn’t yet received their stimulus money.
Filers Must Pay Taxes on Unemployment Benefits as Well
The IRS urges filers not to forget about unemployment benefits, which must also be declared if the filer opted not to have taxes taken from weekly benefit checks. It is important to gather all documents, including W-2s, independent contractor documents, 1099 forms, or other paperwork to declare income. Due to the pandemic, more people than ever have multiple sources for income. Because this may be a new scenario for many individuals, it can be easy to overlook essential documents. Additionally, unlike 2020, those who received unemployment benefits in 2021 will not receive a special tax break.
Gathering Tax Information in Advance
Naturally, numerous filers will not have the appropriate paperwork needed to complete their tax returns until the end of January. Nevertheless, gathering any supporting documents or any paperwork that is available now is a wise course of action. In some cases, it may help to look at the previous year’s tax return for an idea of what information may be needed to file this year. If professional assistance is necessary, filers should not wait to contact an IRS tax lawyer for guidance.
Meta-Title: Chaotic Tax Season on the Horizon for Many Filers
Meta-Description: This year’s tax season may be fraught with issues. Backlogs at the IRS due to funding and staff shortages may delay return processing and refund distribution.