Three-quarters of all Americans get an annual tax refund from the IRS. This is typically the biggest check of the year, a report said.
Treasury Department officials have warned that this year’s tax season may be challenging once the IRS starts processing tax returns on Jan. 24. Last year's processing delays affected nearly 30 million taxpayers, who had their returns and refunds held up by the IRS, according to a published news report.
Tax experts Mark W. Everson, vice chairman at Alliantgroup and former commissioner of Internal Revenue at the IRS, and Christian Cyr, a CPA and president, and chief investment officer at Cyr Financial, along with the IRS have offered some crucial tips that could help avoid a refund delay, CBS News reported.
Taxpayers who file electronically are more likely to have their returns processed quicker than those who file paper returns. According to the department, the IRS uses computers to electronically process filed returns, while paper returns must be handled by human employees.
In 2021, 148 million returns were filed 2021, and of that number, approximately 10 million people filed paper returns, according to the data from the Taxpayer Advocate Service.
That said, tax experts are encouraging people to join the roughly 138 million taxpayers who are already using e-filing, a report said
Direct deposit is another way taxpayers can get their refund quickly. The combination of the e-filing with direct deposit sends the money straight into your bank account. Of the 95 million people who received refunds last year, approximately 87 million of them opted for direct deposit.
The IRS said that those taxpayers who file electrically and choose direct deposit will get their refund within 21 days, the report said.
They are also urging taxpayers not to guess or give rough estimates, but instead, review their forms before submitting them and make sure they are reporting their data correctly. They said even a minor discrepancy on the form can be flagged for manual review, which can delay your tax return weeks or even months.
The IRS is informing those who received the third federal stimulus check-in 2021, as well as the Child Tax Credit payments, to hold onto those documents since they are required by the agency when filling out the tax form.
According to Mark W Everson, taxpayers made mistakes in reporting their 2020 stimulus payment amounts on their returns, resulting in their tax filings getting flagged for manual review, which was one of the factors that contributed to last year's major delay.
Through the end of the month, the IRS will be sending out two letters taxpayers need to look out for: “Letter 6419,” informing taxpayers of their advance CTC payments, which started going out in December and will continue through January, and "Letter 6475,” which relates to the third stimulus check. The agency will be sending those out in late January.
The tax experts suggest keeping both letters and to refer to them when completing your tax return.
Lastly, certain credits taxpayers are claiming may hold up their tax return. For example, the IRS cannot issue a refund that involves the Earned Income Tax Credit (EITC) or the Child Tax Credit before mid-February. This is done in part, by a law called the PATH ACT, that was created in 2015, and designed to help protect taxpayers and the IRS against tax-related fraud based on the PATH ACT.
The agency said that even for those taxpayers who file on Jan. 24, if their tax return involves either of those tax credits mentoned, they still might not receive a refund within the 21-day time frame.
