Last tax season, phone calls to the Internal Revenue Service went unanswered, letters went unopened, tax professionals were stretched thin and many taxpayers are still today awaiting their 2020 refunds and resolutions to various filing issues.
The IRS itself now acknowledges this reality, and in 2022, taxpayers should expect more of the same.
“In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs,” IRS Commissioner Chuck Rettig said in a Jan. 10 press release. “This is frustrating for taxpayers, for IRS employees and for me.”
The processing and refund delays seen in 2021 and likely to be repeated in 2022 can be traced in part to pandemic-related challenges, as well as issues with IRS staffing and funding. And as the omicron coronavirus variant sweeps the country, accountants and individuals themselves may face backlogs due to illnesses.
[How to Get the Biggest Tax Refund in 2022]
The 2021 National Taxpayer Advocate’s Annual Report to Congress highlighted processing and refund delays as one of the 10 most serious problems encountered by taxpayers.
“During 2021, tens of millions of taxpayers were forced to wait extraordinarily long periods of time for the IRS to process their tax returns, issue their refunds, and address their correspondence,” the report reads. “As the IRS is preparing to begin the 2022 filing season, it is poised to carry over millions of unprocessed returns and millions of pieces of taxpayer correspondence, resulting in even longer delays for taxpayers who have been patiently waiting for far too long.”
Still, the IRS maintains that most taxpayers will receive the tax refund owed to them within 21 days of when they file. If your tax refund is delayed, the IRS is required to pay interest on that refund if it not received within 45 days of filing.
Before filing your 2021 tax return, there are some steps you can take to avoid a processing or refund delay. Admittedly, these options are limited — Jeff Levine, chief planning officer at Buckingham Strategic Wealth, suggests the serenity prayer if all else fails — but every bit helps in a tax season like this.
File Electronically and Set Up Direct Deposit
Rettig said in no uncertain terms that “filing a paper tax return this year means an extended refund delay.”
Most taxpayers already file their returns electronically, but the simple steps of filing online and setting up direct deposit may carry the most weight of any when it comes to getting a fast refund.
“There are things people can do to make it better,” says Susan Allen, senior manager of the American Institute of Certified Public Accountants. “I focus on what we can control. Filing electronically, that’s going to help since there’s a backlog in mail. If you are expecting a refund, getting that through direct deposit would help. And make sure you file a clear, accurate return.”
Taxpayers can file electronically through the IRS Free File program or through a private online tax preparer’s website. To set up direct deposit, select it as your refund method through your tax software and type in your account number and routing number.
[Read: How to File Taxes for Free.]
File Early
The 2022 filing season formally opened on Jan. 24 when the IRS began accepting 2021 federal income tax returns. The sooner taxpayers gather their materials, consult with their preparer and file their return, the less likely they will face a delay or be forced to apply for an extension.
“Filing early is one of the best defenses,” Levine says.
[READ: The Benefits of Filing Taxes Early.]
Review Your Return for Accuracy
Tax returns filed both on paper and electronically can be flagged for manual processing for a variety of reasons, such as a possible error, missing information or suspected identity theft or fraud. These situations may require correspondence with the IRS and often result in processing and refund delays.
To avoid the headache of a manual review, check and double-check your return before filing it this year. Taxpayers should pay particular attention to the tax law changes affecting the 2021 tax season, such as advance child tax credit payments and the recovery rebate credit that can be claimed if an individual did not receive the proper stimulus payment.
Consider Applying Your Tax Refund to Next Year
If it works for your situation, opting to apply your tax refund to next year’s taxes can circumvent the issue of a delayed refund entirely, Levine says.
“If you are entitled for a refund, I would think long and hard about it. Your better bet is to roll that over into next year,” he says. Some families may prefer the cash, but Levine says rolling over the refund may be preferred to living with “the uncertainty of not knowing when it will come.”
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How to Avoid IRS Tax Delays in 2022 originally appeared on usnews.com
