Tax season began Jan. 24, starting the processing of 2021 tax year returns and the IRS wants to address some of the obstacles this year may bring.
“The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don’t face processing delays.” IRS Commissioner Chuck Rettig said.
While taxpayers get ready to file their 2021 taxes, there are a few things to consider this year when filing your return.
You can set up an IRS secure account online
By visiting IRS.gov/accounts you can set up a secure online account and log in. There, taxpayers can view their latest information, find info from recently filed returns, transcripts, payments and other federal tax account info. You can also access any Economic Impact Payment amounts or Advanced Child Tax Credit (CTC) payments previously received.
Gather and organize all documents before you file
Gather and organize tax documents to help avoid errors that may slow down the processing of your tax return. Having all your documents ready and available can help you find potential credits and deductions you may be eligible for, not to mention help you avoid unnecessary refund delays. Your records may include dependent info, mortgage statements, forms W-2, 1099s and other income statements from employers, or gig-income and contractor pay. Unemployment compensation, dividends, distributions from a pension, annuity or retirement plan, interest and/or virtual currency income should be included. Remember most income is taxable.
Important letters taxpayers should include
If you received advance payments of your child tax credit, keep a lookout for IRS Letter 6419, 2021 Total Advance Child Tax Credit Payments. Letter 6419 will be mailed to those who received advance payments in 2021 to help calculate the remaining CTC and reconcile payments on the tax return.
IRS Letter 6475, Your 2021 Economic Impact Payment is used to determine Recovery Rebate Credit eligibility. Those who didn’t qualify for the third stimulus payment or didn’t receive the full payment amount based on prior return info may be eligible to claim the credit based on their 2021 taxes. Taxpayers can use IRS Letter 6475 to provide the total amount of the payment received and calculate any third payment amounts. You can expect to receive the letter in the early part of the year.
Decide How to File
There are many ways to file your tax return including IRS VITA/TCE sites, IRS Free-File, Do It Yourself Software or seeking a tax professional’s help. Decide now how you’ll file. Also, ensure that your information is correct including direct deposit info and update any address changes
Consider refund and processing delays
The IRS generally issues refunds in 21 days and refunds for taxpayers with Earned Income Credit (EITC) or Additional Child Tax Credit (ACTC) are expected to be issued in mid-February. But, this year, the IRS advises to not anticipate getting your tax refund by a certain date. The IRS is still backlogged and there are possibilities of delays.
IRS Commissioner Rettig stated, “Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year. And we urge extra attention to those who received an Economic Impact Payment or an advance Child Tax Credit last year. People should make sure they report the correct amount on their tax return to avoid delays.”
Use IRS resources
Visit IRS.gov to find the interactive tax assistant, tax maps, IRS publications and other helpful resources. Use your online account to view information and visit tax centers to learn more about your tax situation.
Become a Resource
You can help those in your community by volunteering at the VITA/TCE Tax Center in your area. IRS VITA provides free income tax preparation assistance to eligible taxpayers. Community organizations such as the John Boner Center offer these services with the help of volunteers. To learn more about volunteer opportunities, please contact your local VITA/TCE center or the John Boner Center for more information. You can also visit IRS.gov/volunteers to learn more about the VITA/TCE programs.
Brittany Sabalza is director of tax education and tax columnist at Pro Tax Solutions Indianapolis.