The Internal Revenue Service plans to open tax-filing season on Feb. 12.
The tax season normally begins in late January, but the ongoing COVID-19 pandemic, the distribution of the latest round of Economic Impact Payments, a backlog of work from last year, and changes in the tax laws seem to be delaying tax season this year. Nevertheless, the IRS announced earlier this week that all tax forms and instructions are ready and that last-minute changes to the tax laws have been included in all the tax forms and instructions.
Economic Impact Payments are an advance payment of the Stimulus. Anyone who didn’t receive the full amount of both EIPs should include the amounts they received, before any offsets, when they file. Anyone who received the full amount for both EIPs should not include any information about the advance payments when they file their tax return.
Also new this year is the option to use prior year income amounts when computing the Earned Income Tax Credit and the Additional Child Tax Credit.
To speed up tax refunds during the pandemic, the IRS is encouraging taxpayers to file electronically with direct deposit as soon as they have the information they need.
“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop to prepare for this as well as delivering Economic Impact Payments in record time,” said IRS Commissioner Chuck Rettig in a statement. “Given the pandemic, this is one of the nation’s most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible.”
Last year, the average amount of the tax refund was over $2,500. More than 150 million tax returns are anticipated to be filed this year, with the majority before the Thursday, April 15 deadline.
Because of provisions in the PATH Act of 2015, the IRS can’t issue a refund involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February. The law gives the IRS extra time to stop fraudulent refunds and claims from being sent out, including to identity thieves.
The IRS is predicting a first week of March refund for many EITC and ACTC taxpayers if they file electronically with direct deposit and there aren’t other issues with their tax returns. Taxpayers will still need to check the IRS’s online Where’s My Refund tool for their personalized refund date.
Overall, the IRS expects nine out of 10 taxpayers will get their refunds within 21 days of when they file electronically with direct deposit if there are no issues with their tax return.