IRS is delaying beginning tax returns till February 12th
The Internal Revenue Service (IRS) building in Washington, DC
According to an announcement by the agency on Friday, the IRS is delaying the start of the 2020 tax return season to February 12.
From this date, the IRS will accept and process last year’s tax returns.
Usually the agency opens the tax season in late January.
This year, however, the IRS will need more time to prepare, following the Covid Aid Act that came into effect at the end of December. And yes, the tax return is still April 15th.
“If filing season started without proper programming, there could be delays in getting refunds to taxpayers,” the IRS said in its announcement.
“These changes ensure that eligible individuals receive the remaining stimulus money as a repayment discount when they submit their return,” the agency said.
The Refund Credit is a new addition to the federal income tax return and is available to Filers who have not received the full incentive to which they are entitled.
“While I am disappointed that this year’s filing season is starting later than usual, I note that the IRS has faced extraordinary challenges throughout the COVID crisis,” said Richard Neal, chairman of the House Ways and Means Committee, D-Mass.
“It’s a relief to know that despite the two-round distribution of payments for economic impact, facility closures, and other disruptions, the agency can start accepting returns within the next month,” he said.
The IRS recommends that taxpayers file their tax returns electronically and make the direct deposit when they are ready.
Refunds in March for some
Early filers claiming certain tax credits will wait until the first week of March to receive their much-needed refund. The IRS said that would still be the case when filing season opened in late January.
Low-income taxpayers who receive the Earned Income Tax Credit or the Child Supplementary Tax Credit typically cannot get a refund until mid-February.
This is because an anti-fraud act requires the IRS to use the extra time to review these returns in order to prevent fraudsters from being granted refunds.
The agency expects filers claiming earned income and additional child tax credits to receive their refunds in the first week of March – provided they submit electronically and there are no issues with their return.
If your return is flagged by the IRS it can cause significant delays.
Over the past year, IRS fraud filters have received 5.2 million returns for which refunds have been requested, according to a recent report from the Taxpayer Advocate Service, an IRS watchdog. For about a quarter of these flagged returns for income verification purposes, refunds took longer than 56 days.
Approximately 2 in 10 of the returns marked for identity verification were delayed by more than 120 days.
Typically, if a tax return has no issues, the processing time for a refund is around 21 days.
Headache for tax professionals and clients
Companies distribute Form W-2 to their employees in January. These documents set out how much workers have earned and what income and wage taxes they have paid over the year.
“You can’t get your refund until the IRS opens the filing, and there are people who get refunds who are used to requesting the filing as soon as they open,” said Ed Zollars, CPA and partner at Thomas, Zollars & Lynch in Phoenix and an instructor at Kaplan Financial Education.
Taxpayers filing their tax returns on paper risk delays. The IRS amassed a major mail jam during the pandemic last year and returns have taken longer to process.
As of November 24th, there were 7.1 million unprocessed individual returns and 2.3 million processed business returns, the Taxpayer Advocate Service found.
“If for any reason you think a paper return makes sense for you, reconsider,” Zollars said.