The Internal Revenue Service said Monday that it will begin processing and accepting 2021 tax returns on Monday, Jan. 24, and the filing deadline will be Monday, April 18.
“The January 24 start date for individual tax return filers will allow the IRS time over the course of the coming weeks to do additional programming and testing that is critical to ensure that IRS systems will run smoothly this filing season and will help taxpayers claim the remainder of their Child Tax Credit and remaining stimulus funds in a timely manner when filing their 2021 returns,” said the IRS in a news release from the Treasury Department.
The IRS expects that most taxpayers will receive their refund within 21 days of when they file electronically, unless there’s an issue with processing their tax return. The IRS is urging taxpayers to use electronic filing to avoid delays in processing and to use the information letters provided by the agency when filing their tax returns to avoid errors that can lead to delays.
Despite the reassurances, this tax season promises to be a complicated one. The National Association of Tax Professionals is warning of a “grueling tax season,” given the complications from advance Child Tax Credit payments, the Child and Dependent Care Credit, stimulus payments, the Earned Income Tax Credit, Paycheck Protection Program loans, and paid sick and family leave credits. The IRS is still dealing with a backlog of 6 million individual returns, the NATP noted.
“Planning for the nation's filing season process is a massive undertaking, and IRS teams have been working non-stop these past several months to prepare," said IRS Commissioner Chuck Rettig in a statement. “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. 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.”
The IRS Free File program will open Jan. 14, when participating providers will accept completed returns and hold them until they can be filed electronically with the IRS. Many commercial tax preparation software companies and tax pros will also be accepting and preparing tax returns before Jan. 24 to submit the returns when the IRS systems open.
Like last year, there will be individuals filing tax returns who, even though they are not required to file, need to file a 2021 return to claim a Recovery Rebate Credit to receive the tax credit from the 2021 stimulus payments or reconcile advance payments of the Child Tax Credit. People who don’t normally file also could receive other credits.
The IRS is mailing special letters to recipients of advance CTCs and the Recovery Rebate Credit with the amount they received; they can also check amounts received on IRS.gov.
The IRS started sending Letter 6419, "2021 Advance Child Tax Credit," in late December 2021, and expected to continue sending them into January. The letter contains important information that can help ensure the return is accurate. People who received the advance CTC payments can also check the amount of the payments they received by using the CTC Update Portal available on IRS.gov.
Eligible taxpayers who received advanced Child Tax Credit payments should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive the payments can claim the full credit by filing a tax return.
In late January, the IRS will start sending Letter 6475, "Your Third Economic Impact Payment," to individuals who received a third payment in 2021. While most eligible people already received their stimulus payments, this letter will help individuals determine if they are eligible to claim the Recovery Rebate Credit for missing stimulus payments. If so, they need to file a 2021 tax return to claim their remaining stimulus amount. People can also use IRS online account to view their Economic Impact Payment amounts.
The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022, for most taxpayers. The due date for most taxpayers is April 18 instead of April 15 because of the Emancipation Day holiday in Washington, D.C.; taxpayers in Maine or Massachusetts have until April 19 to file their returns due to the Patriots’ Day holiday in those states. Taxpayers requesting an extension will have until Monday, Oct. 17, 2022, to file.
Rettig pointed out that IRS employees continue to work hard on crucial areas affected by the pandemic, including processing of tax returns from last year and record levels of phone calls coming in.
“In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me,” Rettig acknowledged. “IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us. And we will continue to look for ways to improve. We want to deliver as much as possible while also protecting the health and safety of our employees and taxpayers. Additional resources are essential to helping our employees do more in 2022 — and beyond.”
The IRS is continuing to reduce the inventory of prior-year individual tax returns that have not been fully processed. As of Dec. 3, 2021, the IRS had processed nearly 169 million tax returns. All paper and electronic individual 2020 refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review.
Taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns and can file when they are ready.
The IRS is encouraging people to use online resources before calling. Last filing season, as a result of COVID-era tax changes and broader pandemic challenges, the IRS received more than four times the usual amount of calls, totaling over 145 million calls between Jan. 1 and May 17.
“Our phone volumes continue to remain at record-setting levels,” Rettig said in a statement. “We urge people to check IRS.gov and establish an online account to help them access information more quickly. We have invested in developing new online capacities to make this a quick and easy way for taxpayers to get the information they need.”
Proactivity leads to success, so please email, mail, or drop-off your tax materials at the ELO office nearest you. If you have questions we suggest reaching out to your ELO trusted advisor ASAP.