On Monday, Jan. 10, the Treasury Department announced that the IRS is facing significant challenges this year due to budget concerns and issues caused by the COVID-19 pandemic. Officials are warning that many taxpayers could see significant delays in receiving their tax refunds this year. There are millions of tax returns that the agency has yet to process and taxpayers may also find it difficult to get the support they need from the IRS, should they need it. With tax filing season just around the corner, it’s important to make sure you’re on top of your taxes and finances to put yourself in the best position to get a speedy refund. A financial advisor may be able to help.
Check out SmartAsset’s free advisor matching tool to find advisors in your area today.
Why Is the IRS Running Behind Schedule?
Typically, the IRS has a backlog of around a million unaddressed tax returns when filing season starts. This year, however, the bureau still had a backlog of more than 8 million total returns as of Dec. 23. Last year, the IRS ended the tax filing season with about four times as many unprocessed returns as they had seen the previous year. Simply put, things at the IRS are extremely backed up, and it’s going to take time to clear the backlog.
The reason for these delays has to do with politics and the COVID-19 pandemic. In recent years, Republicans in Congress have pushed through legislation that has cut funding for the IRS and caused a reduction in IRS staff. This, combined with office closures and staffing shortages due to COVID-19, has been a huge challenge for the IRS.
On top of negative impacts to the IRS, the COVID-19 pandemic also ushered in some massive new IRS programs such as the stimulus payment program and the expanded Child Tax Credit. While these have had positive impacts on taxpayers, they’ve also created loads of extra work for the IRS, contributing to the backlog.
What Kind of Disruptions Should You Expect?
It’s not clear exactly what kind of disruptions you’ll see, and every taxpayer has different circumstances. However, all taxpayers should be prepared to receive their tax refunds later than usual this year just due to the issues at the IRS. You should also be prepared to have trouble reaching the IRS for support should you encounter an issue with your taxes. A survey by the National Taxpayer Advocate showed that only 9% of calls to the IRS were answered at all.
While the IRS has spoken at length about its staffing and fulfillment issues, it hasn’t given a specific timeline for how long tax refunds might be delayed. They may come out with further guidance as we get deeper into tax filing season, but it’s likely that the guidance will continue to be relatively vague.
What Can You Do to See Your Refund Sooner?
As is the case with filing your taxes and getting your refund in previous years, there are steps you can take to set yourself up for a speedy return.
File quickly. One of the best things you can do to speed up your tax refund timeline is to file promptly when filing season begins on Jan. 24. If you file on or soon after that date, you’re likely to get your refund a lot sooner than someone who waits until the April 18 deadline.
Don’t file by mail. Filing you taxes via snail mail can slow up your tax refund, as these returns can take six to eight weeks to process. Electronically filed taxes take closer to three weeks in a good year. Especially this year when the IRS is facing staffing shortages, filing by mail is a good way to potentially delay your refund.
Get your refund via direct deposit. Waiting for the IRS to send you a physical tax refund check is a good way to end up waiting for a while. Instead, consider giving the IRS your direct deposit information for a speedier delivery of your refund.
Bottom Line
Even if you file your taxes correctly and swiftly, there’s still no guarantee that you’ll get a quick refund due to the fact that the IRS remains overwhelmed. However, you can put yourself at an advantage. Make sure to file quickly when the tax filing season begins, and make sure that all your information is correct. You may still end up waiting on your tax return, but it’s also a good thing to get your taxes out of the way sooner rather than later. Plus, if you need more help filing your taxes, don’t be afraid to look for a financial advisor.
Tips for Tax Season
-
Taxes can be complicated, and it pays to have someone in your corner who can help you out. A financial advisor may be able to help you figure out how to manage your tax obligations. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
-
If you’re someone who likes to file your taxes on your own, it’s still a good idea to be well prepared. SmartAsset is here to help, with a number of free online resources that can help you tackle your taxes. Check out our free tax return calculator today.
Photo credit: ©iStock.com/Michael Burrell, ©iStock.com/simpson33, ©iStock.com/ljubaphoto
The post Many Tax Refunds Will Be Delayed, Treasury Says: How to Get Yours Sooner appeared first on SmartAsset Blog.
