2021 Tax Season has started in the US

2021 Tax Season has started

2021 Tax Season has started in the US. Get started before it’s too late!

The IRS is still struggling to process everything, but they warn that there will be more delays if they don’t get their act together.

The IRS has a tough job this year: they are trying to process 6 million unprocessed tax returns from the past year. This number is 5 million more than the usual number of unprocessed returns at the start of a new year. In the wake of multiple pandemic-related complications, the IRS finds itself with a workforce the same size as it was in 1970 and a budget that is 20% lower than it was in 2012. The IRS reported receiving double the number of phone calls it normally receives last year. To handle this growth the IRS made changes and is now equipped to handle the 240 million calls they received last year which were fielded by fewer than 15,000 workers. Beyond processing tax returns, the IRS is also responsible for sending billions of dollars in pandemic relief benefits. This includes the stimulus payments and monthly child tax payments. The complexity of the additional taxation work and lack of new funds meant that this was an especially hard year for tax professionals.

Given the recent budget cuts, the agency has been waiting for Congress to approve a higher budget. The new influx of tax returns is a temporary obstacle, but a manageable one. The IRS received $2 billion in stimulus funding from President Biden’s American Rescue Plan Act, but the new 2022 proposal would increase funding by 15% and give an estimated additional $80 billion over 10 years.

Many returns are being backed up because of IRS audit cases. As well as paper returns which must be processed inside the building. COVID policies also require documents to be scanned before being sent back creating additional backlogs. Filing your taxes early, using our online capabilities, checking your return for errors, and opting for direct deposit will ensure that you’re done with taxes before the deadline. If you would rather file paper returns, you should do that as soon as possible. Returns will be processed in the order that they are received. This is a pretty good thing. If a refund gets delayed, legally the agency must pay a small amount of interest on refunds that have not been remitted 45 days after the deadline. The amount is likely about $18 on average.

STATE NEWS 

Georgians would get $250 if they’re single and $500 if they’re married filing jointly, under a tax overhaul proposed by the Governor.

Governor Brian Kemp is planning to use the surplus of $2.2 billion in tax revenue for taxpayers. The plan for direct payments would result in refunds of $1.6 billion if submitting by the deadline of April 18th. The Governor has also proposed an increase in state employee salaries of $5,000.

Other officials have argued that it would be a good idea to allocate funds from the budget to underfunded sectors, like healthcare and education, that need the support most during outbreaks. Lawmakers have recently cut spending by 10% due to the impact COVID-19 has had on the state. As a result, some see the surplus funds as an opportunity to get other previously neglected social programs back on track. Some opponents to the tax cut plan have also accused it of being an attention-grabbing scheme for Governor Kemp to use in his reelection campaign in 2022.

Consider working with a tax professional who has experience filing tax returns.

We look forward to helping you. 

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