Will My 2020 Tax Return Be Delayed Due to COVID-19?
This article is current as of February 10, 2021. Please note that some of the information in this article is subject to change, so it would be best to consult with a tax professional to receive the most up-to-date information. Call us at 415-924-6240 to speak to someone in our office that can answer your questions.
In light of challenges from the COVID-19 pandemic and recent changes to the tax laws, you can probably expect your 2020 tax refund to arrive a little later than normal.
While most of the reasons for these delays fall completely outside of individual taxpayers’ control, there are some things that you can do to help improve your likelihood of receiving your refund as quickly as possible.
By hiring an experienced North Bay tax preparation company, you can also stay up-to-date on the latest information around your 2020 tax return and ensure that you file as accurately and efficiently as possible.
How Will COVID-19 Affect My Tax Return?
Though there are many reasons why taxpayers may receive their federal tax refunds later than expected during a normal year, the majority of the delays in 2021 will be caused by the COVID-19 pandemic.
As you most likely remember, last year the tax filing date was pushed back from April to July 15 in response to COVID-19, and the Internal Revenue Service offices were shut down from March to June.
As a result, the IRS has been working to catch up with an enormous backlog of 2019 mailed tax returns, and since returns are processed in order of the date they were filed, the 2020 mailed returns will not be processed until the IRS is finished processing 2019 returns.
IRS staff members have also been working on sending out Economic Impact Payments, which requires time and manpower.
On top of these challenges, the IRS is facing unprecedented staffing shortages, due to workers getting sick with COVID-19, quarantining after exposure to the virus, or caring for sick family members.
All of these factors will impact the speed with which 2020 tax refunds are issued. As of December 25, 2020, the IRS reported having 6.9 million individual tax returns in the processing pipeline.
Delays may also vary depending on where you send your tax return. In some locations, the IRS has reported being “caught up or almost caught up,” but in other offices they are still working to process returns that they received over the summer. However, the IRS is working to reroute tax returns and taxpayer correspondence so that locations which have fallen behind can get help from those that are better staffed and further along in the process.
Additionally, the COVID-19 relief bill that Congress passed in December contains some new tax provisions, such as a modified charitable contributions deduction.
While those provisions don’t directly impact the timeline for refunds, IRS workers will have to dedicate time to their implementation, which could further limit their ability to process refunds in a timely manner.
Will COVID-19 Aid Affect My 2020 Tax Return?
When filing your 2020 tax return, the IRS is encouraging taxpayers to also consider the following factors that may affect your tax situation:
- If you received an Economic Impact Payment in 2020, you should also have received a Notice 1444 from the IRS. This notice provides information about the amount of your payment and how it was made. Be sure to provide this to your accountant when filing your 2020 tax return. If you haven’t already received Form 1444, you can request a copy by visiting IRS.gov/account and logging in.
- If you were eligible to receive an Economic Impact Payment and didn’t receive one, or if you received less than the amount you should have ($1,200 for single taxpayers, $2,400 for married couples who filed jointly in 2018 or 2019, and $500 for each qualifying child), you may be able to claim a Recovery Rebate Credit on your 2020 tax return.
- If the IRS sent you an interest payment of at least $10 for delays in issuing your 2019 federal income tax refund, then that interest payment is taxable and must be reported on your 2020 federal income tax return.
- If you received unemployment compensation, then that compensation is taxable and must be reported.
What Can I Do to Receive My Refund Faster?
Even though most of the factors impacting this year’s tax returns are out of your control, there are still some steps you can take to help ensure you get your refund as quickly as possible:
- Make Sure All Information is Complete and Accurate: Inaccuracies on your tax return can cause delays, so make sure you are not making any mistakes, missing information, missing forms, or reporting conflicting information across different forms. The best way to be sure that your tax return is filed accurately is to work with a licensed tax professional, and you can save yourself a significant amount of time in the process.
- File Electronically: Even in a normal year, tax returns that are filed electronically are typically processed faster, as it can take an additional three weeks for the IRS to manually enter a paper tax return into their system. And since the biggest source of delay for the IRS this year centers around the backlog of paper tax returns, filing electronically could potentially speed up the process of receiving your refund even more than normal.
- Opt to Receive Your Return Through Direct Deposit: Your refund will reach you faster if you receive it through direct deposit, rather than waiting for a check to arrive in the mail. In a typical year, requesting your refund in check form can add an extra week to the process, and that delay could be even greater in 2021. Just be sure to double check that you have entered your bank account information correctly!
- Respond Quickly to Any Correspondence: If the IRS needs you to verify any of your information or provide additional documentation, they will write you a letter. If you respond quickly and accurately to inquiries like this, your refund will likely be delayed less.
- Pay Off Any Major Debt: If you, or your spouse who you filed jointly with, have outstanding debt for back taxes, defaulted federal student loans or late child support payments, the IRS may garnish your refund, or withhold it and use it to pay off your debt. If this happens, they will notify you with a letter.
Once you have made sure to follow these guidelines, there is no other action you need to take. In fact, the IRS is requesting that taxpayers refrain from filing a second return or contacting them about the status of their refunds, as these things will simply create extra work for the IRS and slow the process down further.
Who Do I Contact If I Have Questions About My Tax Return?
Since the IRS is short on staff and working to get all 2020 and 2021 tax returns processed as quickly as possible, they are warning taxpayers that the IRS phone support lines will have extremely long wait times, and their responses to mailed -in correspondence will be delayed also.
If you have questions about your taxes, they are recommending that you visit the IRS.gov website to find more information. You may also be able to schedule an appointment for in- person assistance at a Taxpayer Assistance Center, but only for a limited number of services, like authenticating your identity, making a cash payment or getting help with an Economic Impact Payment.
In light of this, it’s more beneficial than ever to hire a licensed tax professional. We can answer many of your questions so you don’t have to waste time waiting for a response from the IRS or trying to find the answers online.
Marin’s Best Tax Preparers
When you work with ProActive Tax Solutions, you can feel confident knowing that you have hired an IRS Enrolled Agent who has the highest level of credentials for tax preparation and is licensed directly through the IRS.
Whether you are dealing with a complicated tax situation or just want help navigating the challenging process of filing taxes in 2021, we can help. And since we are located right here in the Corte Madera, we have worked hard to stay up to date on the latest updates for both federal tax returns and California State taxes.
Don’t Let the IRS Delay Stop You Any Longer
The sooner you file your 2020 tax return, the sooner you can receive your refund, so don’t put it off any longer! Call us now to get started. Our Corte Madera tax preparation office is right off the 101, and you can get a free consultation with Georgia Rogers, E.A. by calling (415) 924-6240.