TaxWatch: 5 ways to avoid tax headaches this year, according to the IRS

Get ready for a rocky tax season pocked by the potential for processing delays and difficulties getting a customer service person on the phone, says the Internal Revenue Service, as it points to its slim staff and high workload.

OK, then. Get ready how exactly?

Days before the Jan. 24 kick-off to tax season, the IRS is giving some tips on how taxpayers can minimize the chance for frustration and maximize the chance for an income tax refund that speeds right into a bank account.

Some pointers are standard tips carrying extra force in the current context. Others are unique for a moment when the IRS is coping with a backlog of unprocessed returns and paying out pandemic-related tax credits.

Put together, they’re useful guidelines for the tax season that lies ahead.

File electronically, use direct deposit — and make sure the numbers are right

The bulk of taxpayers already submit their income tax returns electronically instead of mailing in a hard copy. By mid-May 2021, almost 94% of all individual returns were filed electronically, the IRS said. Meanwhile, 91% of all refunds were via direct deposit. That’s a lot, but there are still more people who could opt for e-filing. They may want to consider it, because when people file hard copy returns and paper checks, the potential for snags and delays increase.

“Paper is the IRS’s Kryptonite, and the agency is still buried in it,” Erin Collins, the IRS’ National Taxpayer Advocate, said earlier this month. Last year’s tax season was “horrendous” for millions and Collins says she’s worried about what lies ahead this year.

Errors will also slam the brakes on a quick return, because IRS workers will need to manually check the numbers and try to fix the discrepancy. With a backlog of 6 million unprocessed original returns as of mid-January, the IRS says a number in the pile include returns with errors on claimed stimulus check payouts or confirmation of numbers related to the Earned Income Tax Credit. The mound of paperwork includes another 2.3 million amended returns as well, Collins noted.

Start collecting your tax documents now, and watch the mail

That includes the W-2’s for your wages, your charitable contribution receipts for a handy tax credit that’s good for 2021, any 1099-B from your broker on your stock market proceeds for capital gains taxation, and so on.

It also should include a document called “Letter 6419,” related to child tax credit cash that the IRS paid between July to December. The IRS will pay the rest of the enhanced credit during tax time (and some parents need to be ready for a smaller refund as a result).

There’s also “Letter 6475” coming, which relates to what the IRS says it paid a household during the third round of stimulus checks. Taxpayers should receive both letters via the U.S. Postal Service.

Check to make sure the IRS has the numbers right, as do you. Any inconsistencies will likely turn processing into a protracted situation.

It’s going to be a long wait talking to someone, so check out the IRS website to save time

The amount of IRS staff fielding phone calls has been dwarfed by the demand , the IRS says. In the first half of 2021, there were fewer than 15,000 people for 240 million calls. Automated disconnects can happen and it’s a gut punch after a long wait.

The IRS is emphasizing it has a range of online resources for tax questions. That includes links like this for tax law questions and resources, as well as FAQs on the Child Tax Credit. There is the ‘Where’s My Refund,’ portal to track when money is coming — but bear in mind one criticism has been the portal doesn’t offer too many specifics on delays.

There were 1.94 billion visits to as of early December, the agency said. That’s up from 1.63 billion at the same point in 2020.

As of December, the IRS had received more than 169 million returns and turned out an average $2,815 refund.

Use this ‘special tip’ if you’re still waiting for a 2020 return to get processed

You moved with all deliberate speed, amassed the necessary documents and double checked the numbers. So far, so good. To push along a 2021 return to the IRS, the agency notes a filer has to include their adjusted gross income from their most recent return. But what if that 2020 return is still pending at the IRS?

In that case, there’s “a special tip to ensure the tax return is accepted by the IRS for processing,” the tax collector says. “Make sure to enter $0 (zero dollars) for last year’s AGI on the 2021 tax return.”

If a household used the non-filer tool to claim the advance child tax credit payments, or the third stimulus check, put down $1 for last year’s adjusted gross income.

Get free tax filing help if you make less than $73,000

The IRS Free File program is a way for people to get help with their tax preparation needs on their federal tax return. The program applies to households making under $73,000.

The program applies to free preparation of federal tax returns, but the IRS notes some of the companies offering software through the Free File program will also generate a state income tax for free. (There are Spanish-language products in the program, the IRS notes.)

Another place to turn for free tax help is Volunteer Income Tax Assistance (VITA) program, as well as the Tax Counseling for the Elderly (TCE) program. VITA sites can offer free tax preparation to people making under $58,000 and the TCE program applies to taxpayers age 60 and above.

Here’s a locator to find nearby VITA and TCE programs.

Community service organizations can also help point people in the right direction on tax questions. Dialing 211 can put callers in touch with a range of social services, including local programs that may assist with free tax preparation, noted Laura Scherler, United Way’s senior director of economic mobility and corporate solutions.

United Way helps recruit and train volunteers and run VITA sites across the country. For people who want to ensure they get an appointment with a helper at VITA site, Scherler has advice: “I would say don’t wait to make your appointment, call early.”

Another option is United Way’s own online tax assistance at, she noted.

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:News