Are you ready for another wild tax season due to the coronavirus pandemic? Neither am I, but it looks like that's what will happen, at least to some degree.
When the Internal Revenue Service today opened Free File, its online, no-cost tax preparation and e-filing option, at essentially the same time as it did last year, I was hopeful we were getting back to tax normal.
But alas, no.
Just a few hours after the official good word on Free File, the IRS said it would not start processing those and all other filings until Friday, Feb. 12.
That's about two weeks later than usual.
And it means it will be early March at the soonest before anyone gets their expected tax refunds.
The later-than-usual tax filing season start date also could push back the delivery of any cash some filers might be able to claim in connection with 2020's two COVID-19 economic relief payments.
COVID-19 cash is a credit: The first relief payment of $1,200 per person was issued last spring under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The second smaller coronavirus financial help of $600 per person was part of the federal spending bill that became law on Dec. 27, 2020.
In both cases, the money was an advance of the newly-created Recovery Rebate Credit, which applies to 2020 tax returns.
But to get the cash into consumers' hands as quickly as possible, the IRS used prior year tax return information to determine taxpayers' relief amounts. In some cases, that meant folks didn't get the full or any credit because their earlier filings showed they made too much money under the rebates' earning limits.
In these cases, taxpayers can apply for the Recovery Rebate Credit amounts they were short-changed when they file their 2020 taxes. That's likely to be the case for many folks who last year saw their incomes slashed due to COVID-19 workplace cutbacks and closures.
FYI, the credit is directly on Form 1040, specifically line 10 on page 1. You can find more about claiming it in my post about the second COVID-19 credit's delivery time table.
Check it out, because it could be worth it. Tax credits are dollar-for-dollar offsets of any tax you owe. Even better, the Recovery Rebate Credit is refundable, meaning that if you don't owe any tax, any excess credit amount comes to you as a refund.
COVID-19 the reason for the delay: The delay in the start of the 2021 tax filing season is due, of course, to the coronavirus pandemic. Oh, 2021, we so don't need you to be another 2020 in any form or fashion.
In announcing the push back to Feb. 12 to start accepting and processing individual tax returns, the IRS said the delay is necessary so that it can do additional programming and testing of its systems.
"This programming work is critical to ensuring IRS systems run smoothly," said the IRS. "If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers."
Important Tax Season 2020 Dates and Deadlines
Jan. 15: IRS Free File opens. Taxpayers can begin filing returns through Free File partners; tax returns will be transmitted to the IRS starting Feb. 12. Tax software companies also are accepting tax filings in advance.
Feb. 12: Tax season 2021 begins with the IRS accepting and processing returns.
Feb. 22: Projected date that the IRS' Where's My Refund online tracking tool will be available. Taxpayers who claimed the Earned Income Tax Credit (EITC) and/or Additional Child Tax Credit (ACTC) should use it to check their refunds' status.
March 1-6: Tax refunds begin reaching EITC and ACTC taxpayers who e-filed and asked that their return be delivered as a direct deposit.
April 15: Deadline for filing 2020 tax returns. This also is the deadline to get an extension to file, but remember that you must pay any expected tax due when you get the extension.
Oct. 15: Deadline for those who requested an extension to file their 2020 tax returns.
Other delays already in effect: This latest COVID-19 related delay is on the heels of a return processing slowdown that's already required by law.
The Protecting Americans from Tax Hikes, or PATH, Act of 2015 ordered the IRS to hold certain tax returns in order to double check them and ensure that they were fake 1040s filed by identity thieves trying to get fraudulent refunds.
Under the law, returns where filers claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) cannot be issued before mid-February. With the slippage of this year's tax processing slipping to then, those taxpayers won't get their refunds until the first week of March at the earliest.
That's effectively the same time frame that many EITC and ACTC filers already are accustomed to when it comes getting their tax refunds.
However, other filers who typically submit returns in late January in the hopes of getting refunds quickly likely now will have a bit more of a wait. The IRS says it will stick with its target of getting refunds out within 21 days or sooner, but that means in best-case scenarios, many of those deliveries also will be in early March.
IRS delay caused by Capitol Hill: If you want to point fingers at someone for that inconvenience (or need if you're planning on using your refund to pay bills), I suggest the usual suspects. Yes, our nation's lawmakers.
The House of Representatives and Senate haggled for months before finalizing the second rebate payment. Donald J. Trump then waited days before finally signing it into law two days after Christmas.
That forced the IRS to wait to make the necessary computer adjustments.
And while the 2021 tax filing season start date focus is on federal returns, expect your state tax collectors to follow suit. Most of the states that do have individual taxes tend to follow the IRS calendar. Check with your state tax office to be sure.
Speeding up your refund: However, the agency does have some suggestions on how to speed up your refund, whether crated by the COVID-19 economic relief payments or otherwise.
- File electronically and use direct deposit for the quickest refunds.
- Check IRS.gov for the latest tax information, including the latest on Economic Impact Payments. There is no need to call. (Shameless plug: You can regularly check the ol' blog, too, for this info.)
- Review the guidelines for the Recovery Rebate Credit. If you already got the maximum amounts for both credits, you don't need to include any information about the payments when you file. But, as I mentioned earlier, if you didn't get the max or only a partial coronavirus payment, look into filing for it on your 2020 tax return. Your tax preparer or tax preparation software (including Free File versions) can help here.
I know, I don't want another COVID-19 crazy tax season either. But to borrow a phrase I heard not too long ago, it is what it is.
At least by the time the IRS is ready to take our 1040s, we should have in hand all the tax documents we need to fill our returns correctly and quickly.
You also might find these items of interest:
- Slow tax refunds again make the annual Top 10 list of taxpayer problems
- 6 things that could delay the arrival or lower the amount of your tax refund
- Got COVID relief money questions? The IRS has updated its online answers