With the current tax season in full flight, here are five key items you need to be aware of as you file your taxes or wait for your refund.
While the IRS has processed millions of refunds, many tax filers are still waiting for their refund payments, sometimes weeks after filing.
1. Despite ongoing system and staffing issues, the IRS has committed to completing tax season on schedule. You can see this table for all key dates in the upcoming tax season. However given all the advance recent tax credits and stimulus payments introduced and paid over the last year, it is taking a while for the IRS to process refund. So file early and accurately using reputable tax software.
2. Once the IRS starts processing your tax return (return accepted), most people can expect to get their refund within 21 days. The exception to this is those claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), for which the IRS has announced it will hold payment of refunds for about 3 weeks in order to perform further identity verification checks. This is due to the mandated PATH act, which lifts in mid-February,
Here are the estimated refund payment dates (based on valid returns being accepted) for the latest tax season, but remember that you should wait at least 21 days before contacting the IRS with any refund payment or delay questions. The best bet is to review the official IRS Where’s My Refund tool of your free tax transcript for the latest status of your refund.
3. Did you know that if your income is below a certain threshold you can actually e-File your taxes for free? Thanks to the IRS Free File program with major tax software providers, they provide a free version of their tax filing software for millions of taxpayers with incomes below a certain level.
So if your income is below this, expect to file your taxes for free. Note that if your tax filing gets complicated or you need additional support, you will likely have to pay extra. You can also request advance refund loans if you qualify.
4. Getting on a call with an actual IRS agent who can help you with your tax return or refund delays can be a challenge in itself. The IRS has recognized that this has been an ongoing taxpayer concern and to alleviate long lines at in-person IRS centers from a first come, first served approach, they have now instituted formal appointments to get in person support.
To schedule an appointment at a IRS Taxpayer Assistance Centers (TAC) taxpayers can call 844.545.5640 or use the TAC tool to find a location near you. Hopefully this means you can get helpful in-person support without having to wait for hours in a long line.
5. Increased identity theft and fraud protection. In addition to holding returns for further validation with EITC or ACTC refunds due – which have a high correlation to fraudulent returns/refunds – the IRS requires taxpayers who self-prepare returns using a tax software filing product for the first time to provide their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.
If you have filed a prior year return, but still waiting for it to process then enter $0 for the prior year’s AGI.
The IRS has also instituted other verification and e-sign procedures, so don’t be surprised if your return is flagged for further verification. While this may hold up refund payments, it will at least mean that the right people are getting their refunds.
6. Check your tax transcript processing cycle code. Many filers who are facing extended refund payment delays are turning to their tax transcript to figure out what is happening with their refund processing status.
By figuring out which IRS batch processing cycle they are in and interpreting the various transcript transaction codes, they are able to get an insight into why their refund may be delayed (TC 570 or 203)and when their refund could be issued (TC 846).
7. IRS notices and letters. It is also important to make sure you open, read and action IRS notices sent to you before, during and after tax season. These official IRS notices or letters can provide valuable information for your filing, but also provide reasons why the IRS has adjusted your refund or actions they need you to undertake to get your refund released.
For example if you received advance child tax credit (advCTC) payments you would have gotten Letter 6419 for the amounts you received. You would need the amounts noted for your tax return filing and if an incorrect amount was entered, the IRS will most likely flag your return for further reviews which will result in delays well beyond the standard processing time.