4 Next Steps for Tax Return Review
Soooooo, what now? I’m glad you (ahem) asked.
Just because tax season is over, doesn’t mean we’re not still here for you.
In fact, with the IRS experiencing a litany of problems right now, we’ll gently recommend a little tax return review. That means going through us for a lot of questions and concerns instead of trying to get answers from them.
Depending on your circumstances, a tax return review for you may be looking for information from the IRS, status updates, or just needing help with various matters. Here are a few “what ifs” that you might be thinking about.
Tax Return Review Step 1: If the IRS owes you a 2020 refund, be patient.
While they aim to issue most refunds within 21 days, the reality is that the IRS is drowning in work, and they simply don’t have the resources to catch up. According to National Taxpayer Advocate Erin Collins, the IRS is holding 31 million tax returns for manual review.
The main issue here is that last-minute Congressional changes to the Earned Income Tax Credit and Child Tax Credit programs came too late for the IRS to incorporate those changes into their computer systems for the current filing season. This IT problem is compounded by a staffing shortage: Only about half of the seasonal return processing jobs have been filled, with over 4,400 such job openings still available right now.
So, if you claimed an Earned Income Tax Credit or Child Tax Credit on your return in particular, you might be waiting a few months to get your refund. The IRS offers a refund status tool online at irs.gov. Or give us a call – we can help you determine the current status of your refund.
The good news here is that the IRS will be paying you 3% interest on any refunds held up past April 15th. That’s better than you’ll get from your savings account, at least.
Tax Return Review Step 2: If you filed a paper return, you might be waiting up to a year.
That’s not a typo — a year. The IRS is still working on over 1.3 million returns for 2019 that were paper filed. Again, not a typo — 2019 returns. This means that there’ll be inevitable delays in the processing of your 2020 return if you filed it via paper.
Your next obvious thought might be to just go back and e-file a 2020 return. The IRS vehemently advises against that because it will then take them even longer to match up your paper return with the electronic return.
Tax Return Review Step 3: If you have a balance due on your 2020 tax return and can’t pay it, let’s talk about it.
I’ll spare you all the details here, but suffice it to say that if your tax return shows a balance due, there are ways to deal with it. Don’t bury your head in the sand on this — it’s not nearly as scary to deal with as you might think.
On a related note, if you prepared your 2020 yourself, but haven’t filed it yet because you have a balance due, file the return. The IRS penalties for not filing the return are massively higher than the penalties for not paying what you owe. Please, please, please, don’t delay filing your tax return just because you’ll owe money.
Tax Return Review Step 4: If somebody else prepared your return, get a second opinion.
Most tax returns are prepared correctly, and there usually isn’t an issue. But you just never know. We have found errors on tax returns prepared by highly-respected CPA firms, local franchises of nationally-known brands, and self-prepared returns using the fancy new artificial intelligence systems. Nobody is perfect, and neither are machines, so mistakes happen. But, you only have a 3-year window in which to fix those mistakes. So, it’s always worth getting another look at those returns.
Just because filing season is done and gone today doesn’t mean we are. We’re still here for you, our Chattanooga clients and friends, ready and able to help you navigate the minefield of all things tax. Schedule your meeting here:
https://login.atomanager.com/ATOM_UST/default.aspx?redirect=webinfoNewClientAppointment.aspx
To getting things done,
John and Wanda King
