Small Business Taxes & ManagementTM--Copyright 2022, A/N Group, Inc.
The IRS has announced it will begin accepting and processing returns on Monday, January 24, 2022, for 2021 tax year returns. The January 24 start date for individual tax return filers allows the IRS time to perform programming and testing that is critical to ensuring IRS systems run smoothly. Updated programming helps ensure that eligible people can claim the proper amount of the Child Tax Credit after comparing their 2021 advance credits and claim any remaining stimulus money as a Recovery Rebate Credit when they file their 2021 tax return.
The IRS is encouraging everyone to have all the information they need in hand to make sure they file a complete and accurate return. Having an accurate tax return can avoid processing delays, refund delays and later IRS notices. This is especially important for people who received advance Child Tax Credit payments or Economic Impact Payments (American Rescue Plan stimulus payments) in 2021; they will need the amounts of these payments when preparing their tax return. The IRS is mailing special letters to recipients, and they can also check amounts received on IRS.gov.
Like last year, there will be individuals filing tax returns who, even though they are not required to file, need to file a 2021 return to claim a Recovery Rebate Credit to receive the tax credit from the 2021 stimulus payments or reconcile advance payments of the Child Tax Credit. People who don't normally file also could receive other credits.
The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way federal holidays do and, the due date is April 18, since April 15th is Emancipation Day in the District of Columbia, a Friday, and the next two days are Saturday and Sunday. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots' Day holiday in those states. Taxpayers requesting an extension will have until Monday, October 17, 2022, to file.
The IRS reported that it is still processing some 6 million 2020 returns filed after April of last year. The IRS cited staff shortages caused by the pandemic and general attrition. The total number of employees has shrunk over a number of years while the number and complexity of returns has increased. The Service continues to reduce the inventory of prior-year individual tax returns that have not been fully processed noting that as of December 3, 2021, the IRS has processed nearly 169 million tax returns. All paper and electronic individual 2020 refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review.
Taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns and can file when they are ready. The IRS continues to encourage taxpayers to file electronically and to use direct deposit for refunds. The Service expects 160 million individual tax returns for the 2021 tax year and an especially difficult filing season. Nevertheless, most taxpayers who file electronically and use direct deposit will receive their refund within 21 days if there are no issues with their return. Taxpayers who file paper returns may find their returns bogged down in the system. The two biggest issues tend to be the child tax credit and the rebate recovery credit (economic stimulus payment).
Some returns, filed electronically or on paper, may need manual review, which delays the processing, if the systems detects a possible error or missing information, or there is suspected identity theft or fraud. Some of these situations require the IRS to correspond with taxpayers, but some do not. This work does require special handling by an IRS employee so, in these instances, it may take the IRS more than the normal 21 days to issue any related refund. In those cases where IRS is able to correct the return without corresponding, the IRS will send an explanation to the taxpayer. Filing electronically can prevent many errors because the returns are checked before they are transmitted to the IRS.
What about a postponed initial due date beyond April 18 like in 2020 and 2021? That looks unlikely this year and taxpayers should not plan on it, but the pandemic may once again force a change.
Copyright 2022 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536
--Last Update 01/11/22