With the May 17 tax-filing deadline looming, many taxpayers are hustling to get their taxes filed to avoid a late penalty.
But between having to manually process a greater number of returns and dealing with broken office equipment and staffing shortages, it looks like the tax agency will have a hard time meeting its own deadlines this year.
Usually, you’d get your payment within three weeks of filing your taxes, but as of May 8, the IRS says its pile of unprocessed returns from 2020 and 2021 is now over 17 million.
That means if you’re counting on your refund to cover urgent expenses and pay down debt, you may be waiting a while.
What’s causing the holdup?
While most of the IRS’s workforce is teleworking, there are certain tasks that can’t be done remotely, requiring employees to be on-site to receive, sort and distribute mail as well as process paper returns.
And social distancing requirements mean the processing centers can’t operate at full capacity.
That means employees are slowly making their way manually through returns that need corrections based on how much you’re owed in stimulus “plus-up” payments or to verify income for certain tax credits.
You may face additional delays if you’ve made an error in calculating how much you’re due back for the recovery rebate credit or your return has other errors. The IRS will get in touch by mail if it needs more information to finalize your return.
But some components of those tasks take more resources than the IRS has on hand.
Not only is the IRS dealing with a serious manpower shortage — as of March 5, it had 4,434 vacant processing positions, according to an interim report from the Treasury Inspector General for Tax Administration — but their ageing office equipment is slowing down work as well.
Reports of broken printers and photocopiers are contributing to the delays. As of March 30, IRS management estimated that 42% of the machines used for processing tasks were unusable, while others were broken but still functional.
Other machines were simply out of ink or their service contracts had expired.
Can I do anything to speed this up?
Unfortunately, there’s not much you can do.
Your best hope is to ensure there are no errors or incomplete details in your tax return before you hit “submit.”
Don’t file a second return as that can cause an even longer delay. And calling the IRS won’t help either, as officials say the tax agency’s ability to respond to calls to its call center has been hampered, with callers experiencing average waits of 18 minutes, compared to 11 minutes before the pandemic.
All you can do is monitor the IRS’s Where’s My Refund tool in hopes of an update.
What if I need an extension beyond May 17?
While anyone can request an extension, some filers get an automatic extension from the IRS, including:
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Disaster victims: Residents of Texas, Oklahoma and Louisiana who were impacted by the February winter storms automatically have until June 15 to file their taxes. They’ll also get more time to make contributions to their IRAs.
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Combat zone taxpayers: Members of the military and eligible support personnel serving in combat zones are entitled to at least 180 days after leaving the zone to file their tax returns and pay any taxes they owe. The IRS provides a list of eligible zones on its website.
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Taxpayers outside of the U.S.: U.S. citizens and residents who live and work outside of the country and Puerto Rico automatically have until June 15 to file their 2020 returns and pay their taxes. This also applies to members of the military on duty internationally who don’t qualify for the combat zone extension.
If you’re not one of those exempted, all you have to do to get more time is submit a request for an automatic extension which would give you until Oct. 15 to file your taxes.
According to IRS estimates, more than 16 million taxpayers will take them up on an extension this year.
But, if you owe money this time around, it’s important to note that your payment is still due by the May 17 deadline. Missing the deadline means you’ll owe interest on any late payments — at a rate of 3% per year, compounded daily.
What to do if you needed your refund yesterday
About 76% of Americans receive a tax refund with the typical payment amounting to $3,660, according to a new study from LendingTree.
Facing a long wait for your payment can be a huge hardship if you’re counting on those funds. But you have a few options to free up a little more cash in your budget.
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Slash your insurance bills. With so many drivers using their cars less frequently during COVID, some auto insurance companies are offering discounts. Not yours? Sounds like it’s time to find a policy at a better price. While you’re at it, you also could save hundreds on homeowners insurance by shopping around for a lower rate.
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Refinance at a better rate. Have you looked into refinancing your home loan in the last year? You could be missing out on some truly game-changing savings. An estimated 13 million homeowners have the potential to save an average $283 a month with a refi, according to mortgage and data technology provider Black Knight.
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Get your coins working for you. Generating extra income in the stock market can be affordable and beginner friendly. One popular app helps you invest your “spare change” and build a diversified portfolio.
