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Tips for maximizing your 2021 tax refund
CPA Chad Elkins breaks down how you can boost your 2021 tax refund during filing season.
CHICAGO - The IRS has one request for Americans looking to get their tax refund as quickly as possible: File your return electronically and as soon as possible.
The tax-collecting agency is staring down a tax season that promises to bring complications and potential delays for taxpayers, given an IRS worker shortage, the Herculean task of administering millions of stimulus checks and adapting to other pandemic-related tax changes, and a massive backlog of unprocessed paper returns.
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The agency is also grossly understaffed; it has 20,000 fewer staff than it did in 2010, and its budget is roughly $11.4 billion – 20% less than it was in 2010, when adjusted for inflation, according to the Congressional Budget Office. On top of that, more than 20% of the IRS customer service workforce has been unable to work for pandemic-related health reasons over the last two years.
"The IRS right now has unacceptable backlogs and the customer service that people are receiving is not what the American public deserves," White House press secretary Jen Psaki said Friday. "The agency has not been equipped with the resources to adequately serve taxpayers in normal times, let alone during a pandemic."
In a recent report to Congress, National Taxpayer Advocate Erin Collins estimated the IRS had a backlog of more than 8.6 million unprocessed individual income tax returns and 2.8 million business returns as of mid-December. It also had close to 5 million pieces of unanswered mail.
By comparison, the IRS usually enters the tax-filing season with fewer than 1 million remaining items to address.
"There is no way to sugarcoat the year 2021 in tax administration: From the perspective of tens of millions of taxpayers, it was horrendous," Collins, who leads the independent watchdog organization within the IRS, wrote in the report. She warned the processing delays could be "as bad, and potentially worse" this year.
DES PLAINES, IL - MARCH 23: The top of a form 1040 individual income tax return for 2005 is seen atop a stack on the same at the Des Plaines Public Library March 23, 2006 in Des Plaines, Illinois. Americans are preparing for the income tax filing dea …
There are fresh challenges facing the IRS this year: Taxpayers will have to reflect the monthly child tax credit payments and the stimulus checks they received in 2021 on their returns, further complicating matters and increasing the likelihood of errors and delays in processing returns.
Delays in processing are to be expected. IRS Commissioner Chuck Rettig already told filers earlier this month that "we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs."
Experts have urged taxpayers to file their tax returns as soon as possible, noting that individuals do not need previous returns in order to submit their 2021 returns. Americans are encouraged to file electronically with direct deposit in order to avoid potential delays and receive their return within 21 days.
The tax-filing season will end on April 18 this year for most individuals, rather than the usual deadline of April 15, because that's when Emancipation Day will be observed in Washington, D.C.
Taxpayers can request an extension online by filling out Form 4868 using the IRS’ "Free File" tool. You need to submit the form by April 18, or print the form and mail it to the IRS address for your state, making sure it's postmarked by April 18.