More Tax News: Huge IRS Backlog, Child Tax Credit Opt-Out
More tax news? Let’s start with this: The Internal Revenue Service has a backlog of 35 million returns. Those 35 million returns, which include some from the 2019 tax year, are still waiting to be processed. A lot of people who have filed and are expecting money back are asking, Where’s my refund?
At this point, the answer is in limbo. Or purgatory, if you prefer.
The IRS points to several factors for the delay. One, changes in tax law before the start of tax season, followed by changes DURING the tax season, increased the agency workload. (It increased the accountant workload, too.) Those changes include an extra stimulus payment, and additional refunds for some taxpayers who collected unemployment during the height of the pandemic.
Next, COVID-19 shutdowns meant millions of pieces of mail went unopened for months. As well, budget cuts have resulted in less staff to handle more work. Also slowing things down are increased scrutiny on returns claiming the Earned Income Credit, the Recovery Rebate credit, or investments in cryptocurrency.
The IRS asks for patience, but affected filers’ patience is pretty worn out by now.
More More Tax News: Trying to Get Through to the IRS
The situation facing taxpayers trying to call the tax agency has also sunk to abysmal. With four times the phone calls in 2021 versus two years ago, the IRS admits they’ve supplied their worst-ever customer service. Want proof? Callers to the main 1040 phone have reached a live human only 3 percent of the time.
If you need to call the IRS, be prepared so you don’t have to call again! Have copies of your 2020 return (last year wouldn’t hurt, too) at hand. If you have a letter from the agency, have it handy, too, to relay the information on it.
Speaking of IRS letters, if you get one, get ahold of us – your accountant! We are used to deciphering them, and we can lower your anxiety level while explaining what they mean. We don’t have a backdoor into the agency, though – unfortunately. (When we call, if a recording doesn’t tell us they’re not taking calls, two hours on hold isn’t uncommon.) But we should be able to tell you what happens next.
More More More Tax News: Opting Out of the Expanded Child Tax Credit
Earlier this year, Congress approved an expanded Child Tax Credit for 2021 that the IRS will pay in advance each month. The credits are good for $250 per child between the ages of 6 and 17 per month, and $300 a month for each child under 5.
But the income limits for this new part of the credits are lower than the regular credit: $75,000 a year for single filers, $112,500 for Head of Household, and $150,000 a year for Married Filing Jointly. That’s much lower than the regular Child Tax Credit. If you are going to earn more than that this year but receive the credit anyway, you’ll have to pay it back come tax time. You can opt of out receiving them in the first place, but the first payments will arrive very soon. So don’t wait!
The IRS portal to opt out of the expanded Child Tax Credit is here.
This Forbes article has tips on how to get through to the IRS.
Lastly, you can learn more about our services here!