Tax season starts today. Here's why you should file as early as possible
It's that time of year again. Monday, Jan. 24 marks the first day U.S. taxpayers can file their 2021 federal returns, and if you're anticipating a refund, don't wait until they're due on April 18 to do so. You will want to get a jump on filing as soon as you can this year.
Typically, the IRS aims to send refunds within 21 days of filing electronically and within six weeks for returns filed by mail. But the agency is already warning that this tax season will be a hectic one, with all of the Covid-19-related tax changes like the stimulus checks and enhanced child tax credit payments.
"In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs," IRS Commissioner Chuck Rettig said in a statement earlier this month. "IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us."
The agency is also still dealing with a couple-million-plus backlog of 2020 returns that need to be manually corrected, as well as a small staff.
The quickest way to get a refund is to file online as early as possible and request direct deposit. The agency says that it processes returns on a first-come, first-served basis.
Covid-19 tax complications slow refunds
Mistakes made by filers when claiming the Recovery Rebate Credit for missing stimulus money have led to delays with 2020 refunds. The IRS anticipates those mistakes will persist when taxpayers claim any missing 2021 stimulus payments, as well as with claiming the child tax credit.
Any mistakes made when filing your return will slow down the arrival of your refund, because IRS staffers need to manually review them. With so many people qualifying for stimulus checks, the enhanced child tax credit, unemployment insurance and other things that complicate returns, there could be many more returns than usual that agents need to look over.
To ensure you don't make mistakes when claiming the rest of your child tax credit, refer to the letter the IRS mailed that details how much money it already sent you in monthly installments from July to December. Subtract the total amount you've already received from the total you claim on your 2021 return.
The IRS also sent letters about the 2021 stimulus payment, which should help when claiming the Recovery Rebate Credit.
The best way to track your refund once you file is to use the IRS's Where's My Refund tool, which is updated daily. It should have a status for you 24 hours after you e-file, or four weeks after you mail a paper return. You will need to enter your Social Security number, filing status and exact whole dollar refund amount from your tax return.
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