How to avoid getting your tax returns delayed

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Treasury Department officials have warned that this year’s tax season may be challenging once the IRS starts processing tax returns on Jan. 24. Last year’s processing delays affected nearly 30 million taxpayers, who had their returns and refunds held up by the IRS, according to a published news report. 

Tax experts Mark W. Everson, vice chairman at Alliantgroup and former commissioner of Internal Revenue at the IRS, and Christian Cyr, a CPA and president, and chief investment officer at Cyr Financial, along with the IRS have offered some crucial tips that could help avoid a refund delay, CBS News reported. 

Taxpayers who file electronically are likely to get their returns processed quicker that those who file paper tax returns. The IRS electronically processes returns filed by taxpayers, according to the department. Paper returns must be processed manually. 

According to data from the Taxpayer Advocate Service, there were 148 million filed returns in 2021. Of that, about 10 million filed paper returns. 

However, tax experts urge taxpayers to join approximately 138million taxpayers who already use efiling, a report stated. 

Another way for taxpayers to get their refund is by direct deposit. Combining e-filing and direct deposit will send the money directly to your bank account. About 87 million people chose direct deposit out of the 95 million who received refunds in 2013. 

According to IRS, those taxpayers who elect direct deposit and file electronically will be refunded within 21 days. 

They also advised taxpayers to not guess or make rough estimates. Instead, they suggested that taxpayers review their forms before they submit them and ensure that their data is correct. They said even a minor discrepancy on the form can be flagged for manual review, which can delay your tax return weeks or even months. 

The IRS is informing those who received the third federal stimulus check-in 2021, as well as the Child Tax Credit payments, to hold onto those documents since they are required by the agency when filling out the tax form. 

According to Mark W Everson, taxpayers made mistakes in reporting their 2020 stimulus payment amounts on their returns, resulting in their tax filings getting flagged for manual review, which was one of the factors that contributed to last year’s major delay.

Through the end of the month, the IRS will be sending out two letters taxpayers need to look out for:  “Letter 6419,” informing taxpayers of their advance CTC payments, which started going out in December and will continue through January, and “Letter 6475,” which relates to the third stimulus check. They will be sent by the agency in January.

The tax experts suggest keeping both letters and to refer to them when completing your tax return.

Lastly, certain credits taxpayers are claiming may hold up their tax return. For example, the IRS cannot refund taxpayers who claim the Earned Income Tax Credit (EITC), or the Child Tax Credit (CTC) before mid-February. The PATH ACT law, which was passed in 2015 and is designed to protect taxpayers from tax-related fraud, does this part.

The agency said that even for those taxpayers who file on Jan. 24, if their tax return involves either of those tax credits mentoned, they still might not receive a refund within the 21-day time frame.