Tax season is officially here. And like last year, experts say complications and delays could mean a longer wait for your federal tax refund.
To avoid a delayed refund, the IRS recommends filing your return early, filing electronically, and choosing to receive your refund via direct deposit to your bank account. Before you file, it’s also important to check for any errors that may lead to delays — especially if you were eligible for advance Child Tax Credit payments or the third stimulus check last Spring.
Here are a few things to keep in mind as tax season begins, and tips from experts to help you prepare to submit your return.
What to Know Before Filing Your Taxes
Before you file your tax return, take some time to review your documents and get a sense of how much you have already paid, says Garrett Watson, a senior policy analyst for the Tax Foundation, an independent tax policy nonprofit. This will help determine how much you owe the IRS or how much money you can expect to receive in a refund. Knowing the amount of taxes you’ve already paid can help you address potential problems right away.
You should also make sure to gather all of the necessary documents before filing. Employers have until Jan. 31 to provide your Form W-2 wage statements, so you may not be able to file today if you’re still waiting. Here are a few common tax records you may need:
- W-2 from your employer
- Forms 1099 (including 1099-MISC or 1099-INT) for miscellaneous income, including retirement plans and banks. You may receive multiple 1099s — for instance, for any interest you earned on a savings account, income earned as a gig worker, or unemployment benefits you received.
- Form 1098: Mortgage interest statements
- Letter 6419 to reconcile advance Child Tax Credit payments with the amount you’re still owed
- Letter 6475 to reconcile stimulus payments via the Recovery Rebate Credit
- If you bought crypto last year: Information about any taxable cryptocurrency transactions
Expect Delays This Tax Season
Like in 2021, it could take longer than usual to receive your tax refund this year.
“I think the IRS has done a service by warning people upfront about what the process is going to be like this year,” says Janet Holtzblatt, a senior fellow at Urban-Brookings Tax Policy Center. “But it’s not the position that anyone would want their tax agency to be in.”
Advance Child Tax Credit payments, stimulus checks, and other changes to the tax code as a result of the pandemic will drive this year’s delays, Holtzblatt says.
The best way to avoid delays is by using direct deposit to get your tax refund faster and avoid errors in your return.
“It’s critical this year to avoid a paper tax return whenever possible and file electronically with direct deposit,” IRS Commissioner Charles Rettig recently said in a statement. “And it’s more important than ever to make sure you’re filing an accurate tax return.”
Before submitting your tax return, it’s best to manually review your forms before submitting to account for any errors that could cause delays. Miscalculations or skipping a critical section will mean that the IRS has to manually review it, and you’ll need to submit a correction — which could take longer than usual this year.
Refunds made via direct deposit are received within 21 days for nine out of 10 taxpayers, according to the IRS. Before submitting your return, you can choose direct deposit as your refund method on your tax software. If you work with a tax professional to file your return, make sure to request that they e-file your return. You’ll need to enter your account and routing numbers for the IRS to deposit your refund without any delays.
Also remember to double check for any errors. If you make a calculation error, have missing information, or suspected identity theft or fraud, your electronic return can get pulled out of the system, manually reviewed, and you’ll need to provide a correction — a process that can stall refunds.
If you do have an issue, check the IRS website instead of calling. Like last year, Holtzblatt says there will likely be a surge in call volume, which means your chances of live assistance may be slim.
After submitting your tax return, you can use the IRS’ Where’s My Refund tool to check the status of your refund 24 hours after filing electronically or four weeks after mailing your return.
Be Prepared to Reconcile Payments
A big potential source of this year’s tax delays will be calculation errors — a common tax season problem that Watson says will be even more widespread this year. He predicts that most of these errors will stem from the advance Child Tax Credit payments and third stimulus checks millions of Americans received in 2021.
If you received advance Child Tax Credit payments, make sure you have Letter 6419 — the IRS began sending these letters in late December. It shows how much Child Tax Credit money you have already received via advance payments. You’ll need this to reconcile those payments with the remaining amount you’re eligible to receive when you file.
As for those who were eligible for the third stimulus, or Economic Impact Payments, the IRS will send Letter 6475 in late January. If you never received the third stimulus check, this letter can help you determine if you should claim the Recovery Rebate Credit.
Some taxpayers may be eligible for more money than they received in the third round of stimulus. That’s because the checks were originally based on your last filed tax return, which may not have represented your financial situation in 2021. Depending on your financial circumstances, you may qualify for a larger payment, which you can claim when you file this year, Holtzblatt says.
However, like last year with the first two stimulus payments, you shouldn’t worry about paying back additional stimulus check money if you were paid more than you were eligible for, Watson says.
Other Dates to Keep in Mind
Delays may be inevitable for many taxpayers this year, but filing early and accurately can help you avoid long waits for your refund or the need to amend your return. As you prepare to file your 2021 taxes, here are some other dates to mark on your calendar:
- Jan. 24: First day you can file federal tax returns
- Jan. 31: Deadline for employers to give employees Form W-2 for filing
- April 18: Last day to file your 2021 tax return, request an extension, and pay taxes owed
- April 19: Last day to file your 2021 tax return, request an extension, and pay taxes owed for Massachusetts and Maine residents
- Oct. 17: Due date to file if you request and are granted an extension