You’re not alone if you waited many months for your tax refund last year. The IRS still had millions of tax returns to process in November 2020, which meant that millions of taxpayers didn’t get their 2020 tax refunds until nearly the end of 2021.
We understand that your tax refund is one of the largest checks you receive throughout the year, and you rely on receiving it on time.
So, what occurred the previous year? Is it possible to prevent this issue when it comes to receiving your tax refund in 2021?
Let’s take a look at what happened in 2020. While we’re at it, we’ll give you some pointers on how to get your tax refund as soon as possible during the 2021 tax season.
Why were some 2020 tax refunds taking so long to arrive?
The short answer is that the pandemic has resulted in tax adjustments.
The long answer: It’s no secret that the coronavirus pandemic is causing personnel shortages and budget cuts at numerous businesses across the country. There is no exemption when it comes to the Internal Revenue Service. COVID-19’s economic impact pushed the government to undertake a slew of tax reforms during the last two years, and the IRS, like the rest of us, has been straining to stay up.
The American Rescue Plan, which was signed into law in March 2021, was a major factor in the protracted wait for refunds last year. After roughly half of 2020’s tax returns had already been filed, this relief law implemented some retroactive tax modifications. Many early filers were unexpectedly owed a refund, prompting the IRS to go back and reconcile millions of previously submitted tax forms.
This made processing everything else more difficult, and the IRS was left with a backlog of tax returns to sort through.
That brings us to another reason for the extended wait for refunds: human verification of tax problems connected to relief legislation.
Consider the following instances to gain a better understanding:
Anne was supposed to get two stimulus cheques in 2020, but she only recalls getting the first one. She used the Recovery Rebate Credit on her 2020 tax return to recoup the second stimulus payout she didn’t receive.
Anne should have received the full amount of both stimulus grants in 2020, according to IRS records. This suggests she most likely overclaimed her Recovery Rebate Credit. The IRS will have to carefully evaluate Anne’s return to decide whether the amount is correct because the amount she claimed does not match what the IRS calculated she was eligible for.
If the amount you claimed for a Recovery Rebate Credit in 2020 didn’t match what the IRS projected you may claim, your return had to be reviewed manually.
Grant was laid off in April 2020 and was unable to find work for the remainder of the year. He took use of the IRS’s “lookback” rule when filing his 2020 tax return, arguing that he could utilize his 2019 earned income to calculate his Earned Income Tax Credit (EITC). Grant did this since his 2019 earned income was significantly lower than his 2020 earned income, and using his 2019 earned income would result in a greater tax benefit.
Taxpayers who used the lookback rule to determine their Earned Income Tax Credit or Additional Child Tax Credit in 2020 had their returns manually scrutinized by the IRS (ACTC). Grant’s return took longer to submit owing to human review because he claimed the EITC with his 2019 income.
If you claimed the EITC or ACTC using the lookback rule on your 2020 tax return, the IRS needed a manual review to assure correctness.
How can I collect my tax refund for 2021 as quickly as possible?
It’s up to the IRS to complete your tax return and send you your refund as soon as possible after you file it. There are, however, some steps you can do to ensure that the procedure runs well and that you receive your refund on time.
1. File your taxes for the year 2021 as soon as feasible.
This is the most important step you can do to ensure that your tax refund arrives on time. Returns are processed and reviewed in the order they are received once the IRS opens for tax season. The best thing you can do to get your tax refund as soon as possible is to submit it as soon as possible! Simply ensure that you have all of the required tax documentation on hand.
2. Fill up and submit your tax return online.
We understand that not everyone is tax-savvy enough to file their taxes electronically. Thankfully, internet tax software is improving all the time. E-filing can walk you through the tax filing procedure step by step and even alert you to any mistakes or typos you may have made.
Paper returns are longer to process, and they raise the risk of human errors (such as math errors), which just adds to the time it takes to remedy them.
3. Accuracy is crucial.
We say it all the time, but keeping your tax data structured is the greatest way to ensure that your tax return is accurate. And the IRS prefers to see precise tax returns!
If you’re claiming any tax credits in 2021, make sure you have all of the necessary documentation available to assist you to figure out how much you should claim. In 2021, for example, IRS Letter 6419 will be given to Child Tax Credit recipients to help them calculate exactly how much of the credit they need to claim on their tax return.
If your figures don’t match the IRS’s calculations, you’ll face a manual review and, most likely, a lengthy delay in collecting your tax refund.
Is it possible to check the progress of my tax refund?
On their website, the IRS has a helpful refund tracker. If your tax return has been accepted, you can use their Where’s My Refund? feature to track the progress of your refund.
Unfortunately, the refund tracker will only tell you that the IRS has received your tax return if it is stalled in processing. The best course of action is to wait for the IRS to accept your return and then use the Where’s My Refund? feature to track its progress.
Let’s hope for quick refunds in 2021.
We understand how frustrating—and stressful—it is to wait a long time for your tax refund. However, if you follow these simple steps, you’ll be on your way to receiving your 2021 tax return as soon as possible this year.