Tax season begins on January 24. File as soon as possible – Forbes Advisor

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The IRS announced the 2022 tax season will officially start on Monday, January 24, 2022when it will begin processing and accepting 2021 tax returns.

Unlike the 2021 tax season, when the IRS extended the tax deadline from April 15, 2021 to May 17, 2021the IRS is not expected to extend the tax deadline this year.

Tax season normally ends on April 15. However, April 15, 2022 falls on Emancipation Day, a District of Columbia holiday, so the deadline to submit your 2021 tax return or request an extension is April 18, 2022.

But don’t be fooled into feeling relaxed about filing your taxes, especially if you expect to receive a refund.

The IRS predicts that this tax filing season will face many challenges due to budget cuts and federal stimulus measures, such as economic impact payments (also called stimulus checks) and the tax credit. monthly advanced for children, increasing the workload of the IRS.

Add that to the continued impact of a difficult 2020 tax season, which the Taxpayer Advocate Service, an independent organization within the IRS, called “horrific.”

The IRS refund website received hundreds of millions of hits last season, symbolizing the deep frustrations of taxpayers. Most phone calls to the IRS went unanswered, and as of December 2021 there were six million unprocessed personal tax returns.

This year will probably aggravate the misery. The agency warns taxpayers that refunds and tax filings may take longer than expected. Typically, the IRS processes tax refunds within 21 days when the taxpayer files electronically and chooses direct deposit.

Here’s why filing early this year is key.

You want your refund fast

If you expect to get money back from the IRS, file your return early to speed up your tax refund.

The National Taxpayer Advocate recently released its annual report to Congress, ranking late tax refunds as the IRS’ #1 problem. Last year, the IRS reported delays for millions of tax refunds beyond the typically 21-day processing time due to a backlog.

Filing early this tax season can help speed up the process because the sooner your tax return gets to the IRS, the sooner it is processed. You should also opt for e-deposit and get your refund by direct deposit.

According to the IRS, 8 out of 10 taxpayers receive their money by direct deposit, which reduces processing times compared to paper checks. Typically, the IRS processes direct deposit tax refunds within 21 days; however, it can take up to 6 weeks if you filed a paper tax return.

Direct deposit is free and you can even split your refund between different accounts. For example, if you expect a tax refund of $3,000, you can choose to have $1,500 deposited into your checking and savings accounts.

Your tax return is more complicated than usual

While it’s still essential to make sure you file an accurate and complete tax return, it’s crucial for the 2022 tax season.

Millions of Americans have received economic impact payments (stimulus payments) and monthly child tax credit advance payments. In some cases, you will need to report the amount you received from your stimulus or child tax credit payments on your 2021 tax return. For this reason, you should file early to anticipate any errors you or your tax preparer could make on your tax return.

The IRS warns you to ensure that your tax return is accurate and complete to avoid further processing delays. If you don’t, the IRS may request additional information by mail, which may further slow down the processing of your return.

To make sure you are reporting your payments correctly, the IRS will send letters to Economic Impact Payments and Advanced Monthly Child Tax Credit recipients in January.

Letter 6475, Your Third Economic Impact Payment, will include stimulus payments received. In contrast, Letter 6419, 2021 Advance Child Tax Credit will provide advance monthly child tax credit payments received in 2021.

Do not throw away these letters. You will need the information in these letters to accurately prepare your tax return and reduce errors or processing delays.

Here’s how these factors can complicate your tax return. Suppose you received a partial stimulus payment. You may be eligible to receive more money by claiming the salvage rebate tax credit. You will receive this credit to make up any difference between what you were eligible for and what you received in 2021.

Likewise, your child tax credit payment letter will help determine if you are eligible for additional child tax credit payments or if you must repay any advance payments received to the IRS.

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