- The IRS anticipates that most taxpayers who file electronically, choose direct deposit and have no issues with their tax return will receive their refund within 21 days.
- It is sending out letters in January that should be used to accurately prepare returns.
- The IRS also announced it will start to accept 2021 tax returns on Jan. 24 and that it has no plans to extend the deadline beyond April 18.
The IRS is urging Americans to file their 2021 tax returns online and as soon as possible to avoid delays in processing and receiving refunds.
"Planning for the nation's filing season process is a massive undertaking, and IRS teams have been working nonstop these past several months to prepare," said IRS Commissioner Chuck Rettig in a Monday 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."
The IRS anticipates that most taxpayers who file electronically, choose direct deposit and have no issues with their tax return will receive their refund within 21 days. It is sending out letters in January that should be used to accurately prepare returns.
"People should make sure they report the correct amount on their tax return to avoid delays," Rettig said.
The agency reiterated that there are no plans to extend the filing deadline of April 18. It also announced it will start to accept 2021 tax returns on Jan. 24.
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The average tax refund in 2020 was more than $2,800, according to the IRS. This year, the agency expects more than 160 million individual tax returns to be filed during the season.
How to avoid delays
The agency has a few tips for people to aid a smooth tax season, including making sure you have all applicable letters from the IRS before submitting your return.
"Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year," Rettig said.
The IRS Free File program, which is available to taxpayers who made $73,000 or less in 2021, will open on Jan. 14, the agency said. In addition, many other tax-filing software programs will be available for people to use for the start of the season.
Individuals who received an economic impact payment or the advance child tax credit last year should be extra careful, Rettig added.
Seeking professional help
Of course, many Americans won't have the paperwork they need to file their taxes until the end of the month. Still, they should start gathering the materials they can and decide soon if they might want to enlist professional assistance.
"If you are seeking the help of a professional tax preparer or a CPA to file your taxes, they may be super-bottlenecked [in April]," said Sheneya Wilson, CPA and founder of Fola Financial in New York.
Those seeking help from the IRS itself are advised to look at the agency's online resources before calling. During last year's filing season, calls to the IRS were four times higher than in an average year.
"Our phone volumes continue to remain at record-setting levels," Rettig said. "We urge people to check IRS.gov and establish an online account to help them access information more quickly."
Paperwork to collect
A good place to start to prepare is with your previous tax return, experts say, which will give you a guideline of what information you'll need to collect for 2021.
Generally, you'll need to gather any W-2s from employers, or 1099 forms, if you're an independent contractor, freelancer or have a side hustle.
People who had any period of unemployment in 2021 should include a Form 1099-G, which will be sent to them from their state unemployment department. They should be prepared to pay taxes on those benefits, as well. Unlike in 2020, there is no tax break for people who got unemployment benefits this year.
For those who benefited from the child tax credit, a Letter 6419 will be sent from the IRS. Stimulus check recipients should look out for a Letter 6475 from the agency in late January.
What's more, if you didn't get a stimulus check in 2021, you may still be able to claim it when you file your taxes. If you became eligible due to a change in income or don't traditionally file taxes, you can get the money by claiming the recovery rebate credit on your tax return.
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