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Why Was My Refund Delayed Final Yr?


For those who waited a number of months to obtain your tax refund final 12 months, you aren’t alone. In November of 2020, the IRS nonetheless had thousands and thousands of tax returns left to course of, which means thousands and thousands of taxpayers didn’t get their 2020 tax refunds till virtually the tip of 2021.

We all know your tax refund may be one of many greatest checks you obtain in the course of the 12 months, and also you depend on getting that cash again in a well timed trend.

So, what occurred final 12 months? And might this example be prevented in the case of getting your 2021 tax refund?

Let’s go over the fundamentals of what occurred in 2020. Whereas we’re at it, we’ll additionally provide you with some recommendations on the way to be sure to obtain your tax refund as shortly as doable in the course of the 2021 tax season.

Why did some 2020 tax refunds take so lengthy?

The brief reply: tax adjustments attributable to the pandemic.

The lengthy reply: It’s no secret that many companies throughout the nation are coping with employees shortages and finances cuts caused by the coronavirus pandemic. The Inner Income Service isn’t any exception. The financial toll of COVID-19 pressured the federal government to make many tax adjustments over the previous two years, and like the remainder of us, the IRS has been struggling to maintain up.

The American Rescue Plan signed into regulation in March 2021 was an enormous a part of why refunds took so lengthy final 12 months. This reduction laws utilized some retroactive tax adjustments — after about half of 2020’s tax returns had already been filed. Many individuals who filed early had been all of the sudden owed a refund, forcing the IRS to return and reconcile thousands and thousands of tax returns that had already been processed.

This made it harder to course of the whole lot else and left the IRS with a backlog of tax returns to sift by means of.

Which brings us to a different cause why refunds have been taking so lengthy — guide verification of tax discrepancies associated to reduction laws.

To raised perceive this, let’s take a look at a few completely different situations:

State of affairs 1:

Anne was purported to obtain two stimulus checks in 2020, however she solely remembered receiving the primary one. When she filed her 2020 tax return, she claimed her lacking second stimulus cost utilizing the Restoration Rebate Credit score.

In keeping with the IRS’s information, Anne ought to have acquired the complete quantity of each stimulus funds in 2020. This implies she seemingly claimed an excessive amount of along with her Restoration Rebate Credit score. As a result of the quantity Anne claimed doesn’t match what the IRS calculated she was eligible for, the IRS must manually assessment Anne’s return to find out which quantity is appropriate.

For those who claimed a Restoration Rebate Credit score in 2020 and the quantity didn’t match what the IRS calculated you possibly can declare, your return required a guide assessment.

State of affairs 2:

Grant misplaced his job in April 2020 and was unemployed the remainder of that 12 months. When submitting his 2020 tax return, he took benefit of the IRS “lookback” rule stating he may use his 2019 earned earnings to find out his Earned Earnings Tax Credit score (EITC). Grant did this as a result of his 2020 earned earnings was a lot decrease and utilizing his 2019 earned earnings would give him a bigger tax credit score.

The IRS manually reviewed 2020 returns the place taxpayers used the lookback rule to calculate their Earned Earnings Tax Credit score or Extra Little one Tax Credit score (ACTC). Since Grant claimed the EITC utilizing his 2019 earnings, his return took longer to course of attributable to guide assessment.

For those who used the lookback rule to assert the EITC or ACTC in your 2020 return, your return additionally required a guide assessment by the IRS to make sure accuracy.

How can I get my 2021 tax refund as quickly as doable?

When you file your tax return, it’s as much as the IRS to course of your return and ship you your refund in a well timed method. Nonetheless, there are some steps you may take to make sure a clean course of and enhance the potential for receiving your refund on time.

1. File your 2021 taxes early

That is the largest step you may take to make sure you obtain your tax refund on time. As soon as the IRS opens for tax season, returns are processed and reviewed within the order they’re acquired. If you would like your tax refund as early as doable, the most effective factor you are able to do is file as early as doable! Simply be sure to have all the required tax paperwork you want available.

2. E-file your tax return

We get it, not everybody feels tax-savvy sufficient to e-file their taxes on-line. Fortunately, on-line tax software program is simply getting higher. E-filing can information you step-by-step by means of the tax submitting course of and even warn you to doable errors or typos you might need made.

Paper returns take longer to course of, plus they enhance the possibility of human errors (comparable to math errors), and correcting these sorts of errors solely makes the method take longer.

3. Accuracy is essential

We are saying this on a regular basis however retaining your tax information organized is one of the best ways to be sure to are submitting an correct tax return. And correct tax returns are what the IRS likes to see!

If you’re claiming any tax credit for 2021, be sure to have the suitable paperwork available that can assist you decide the proper quantities to assert. In 2021, for instance, the IRS is sending Letter 6419 to advance Little one Tax Credit score recipients in order that they know what remaining credit score quantity they should declare on their tax return.

In case your numbers don’t match up with the IRS’s calculations, that’s going to set off a guide assessment and most definitely a major delay in receiving your tax refund.

Can I observe the standing of my tax refund?

The IRS supplies a helpful refund tracker on their web site. In case your tax return has been accepted, you may observe the standing of your refund utilizing their The place’s My Refund? instrument.

Sadly, in case your tax return is caught in processing, the refund tracker will solely let you know that the IRS has acquired your return. The perfect factor to do is wait to your return to be accepted by the IRS, after which use the The place’s My Refund? instrument to trace its standing.

Right here’s to quick refunds in 2021

We all know ready a very long time to your tax refund is extremely irritating — to not point out nerve-racking. However by following these easy suggestions, you’re setting your self as much as get your arms in your 2021 tax refund as quickly as doable this 12 months.

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