HARTFORD, Conn. — Tax filing season started Monday and financial advisors are warning people to brace themselves for a complicated filing season as the Internal Revenue Service continues to deal with COVID-related challenges, including a backlog of returns from last year's filing season.
"I expect to see so many problems coming out from this season, and unfortunately the service is underfunded, understaffed and has tremendous delays," said Sara Spodick, director of the Tax Clinic at Quinnipiac University School of Law.
Spodick suggests people file early and be prepared with all necessary paperwork, including two significant new documents.
"One is letter 6419, which is going to be issued from the Internal Revenue Service that states how much an individual may have received in the child tax credit," she said. "That's new for this filing season and also people should look out for letter 6475, which states the amount you receive for your third economic impact payment."
If you're eligible and did not get a third stimulus payment from the government, you are able to claim that in your taxes this year.
"If they didn't receive it, then they can claim what's called the Rebate Recovery Credit on their return," said Spodick.
Additionally, eligible parents can also receive the child tax credit, even if they did not participate in the advanced payments over the past six months.
"They just claim the regular child tax credit on the return as they always have," said Spodick.
Something else to keep in mind this year is that unemployment payments are subject to taxation, unlike in 2020.
"And most individuals do not normally elect to have taxes withheld when they receive their unemployment, so individuals who received unemployment may see smaller refunds or a tax return where they actually owe something," said Spodick.
The bottom line: Be aware of the changes that apply to you to avoid any issues.
"What we're finding in our own caseload is that the IRS is averaging over 200 days to answer a simple paper request process, so if taxpayers don't submit complete returns, they are not going to get their refunds timely," said Spodick.
The IRS expects most taxpayers will get their refund within 21 days of when they file online if there aren't any issues.
The filing deadline is Monday, April 18.
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