Tax season begins on Jan. 24, and taxpayers should expect delays as the IRS works to clear a backlog and personnel shortages, according to Treasury officials.
According to the IRS, 6 million individual returns have already been submitted by taxpayers as of Dec. 23, and the situation is certain to worsen once the new tax season begins.
“We are unable to provide the level of service and enforcement that our citizens and tax system deserve and require in many places,” IRS Commissioner Chuck Rettig stated.
During the first half of 2021, there were fewer than 15,000 people to handle the 240 million incoming calls, which equates to one person for every 16,000 calls.
According to the Taxpayer Advocate Service’s mid-year report, just 7% of taxpayers sought out an agent throughout the filing season last year.
However, you may minimize delays by submitting online with direct deposit, according to Rettig, and keeping an eye out for irregularities, which may necessitate a human review, especially for stimulus and advance child tax credit payments.
Here’s what more you should know before submitting your tax return.
Payments for the Child Tax Credit in Advance
For 2021, the American Rescue Plan increased the child tax credit to $3,000 for families with children aged 17 and under, with an additional $600 for children under the age of six.
Experts believe that while millions of Americans have gotten advance credits, filers who earned more than expected may have to repay part of it.
Single filers must have a modified adjusted gross income of less than $75,000, and married couples filing jointly must earn less than $150,000 to qualify for the full benefit.
IRS Letter 6419 should be on the lookout for payment reconciliations, says Asheville-based tax services director Larry Harris of Parsec Financial, a certified financial advisor.
Fill Out Your Tax Return as Soon as Possible
You can also calculate advance credits using the Child Tax Credit Update Portal by comparing bank statements to IRS information.
Because many taxpayers had 2020 refund delays as a result of stimulus payments, Harris recommends starting the filing process as soon as possible.
He said, “Get your return filed as soon as possible.” “At the very least, that will begin the wheels rolling in what might be another sluggish year for IRS processing.”
Payment of a Stimulus Package
As part of the $1.9 trillion American Rescue Plan, Americans began receiving the third wave of stimulus payments in March 2021, worth up to $1,400.
If you got a check, look for Letter 6475, which covers what the IRS gave in 2021 as well as what’s still owed to other beneficiaries.
According to the IRS, if you’re owed a stimulus payment, you still have time to claim it by completing your 2021 tax return.
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Subsidies for Medical Insurance
In March, Congress boosted premium subsidies for health insurance, making coverage more accessible to millions more Americans.
While the exchange has temporarily set premiums at 8.5 percent of family income, you may be required to refund part of the benefits if your wages reach the 2021 criteria.
“For individuals who have to repay the money, it may be a really unpleasant and stressful scenario,” Harris added.
However, he suggests that you start working with a tax expert now to anticipate 2021 income to estimate obligation and set away money for a future payment.