File early and electronically to get your refund faster
The pandemic disrupted tax season and left the IRS scrambling to catch up. Here's how to file smart, claim what you're owed, and get your 2020 refund as quickly as possible.
We here at BILLSHARK, along with most everyone else, were thrilled to bid farewell to 2020. But there is some unfinished business remaining from last year, and that is filing our 2020 taxes.
1 Why the IRS Pushed Tax Season Back
Taxes were among the many things the pandemic disrupted last year. Some taxpayers are still waiting for their 2019 refunds and their first round of pandemic stimulus checks. But the IRS has been facing disruptions. Its budget was cut 20 percent in 2010 and the impact of the pandemic resulted in severe staffing reductions.
Add to that the extra workload of processing two rounds of stimulus checks with employees working from home. You can see why the IRS announced it will delay the start of tax season to February 12 this year. It desperately needs that extra time to try to catch up on last year’s backlog. Plus it must add additional programming on the December 27 tax law changes that authorized more economic stimulus.
“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.” — IRS Commissioner Chuck Rettig
2 Skip the Paper Return
The IRS warns this year is likely to be no different from the last. It urges taxpayers to file early and electronically.
“During the pandemic, it is more important than ever that taxpayers choose to file their returns electronically and not send them in by mail,” the IRS said in a statement. “It is also more important than ever that taxpayers choose direct deposit on their returns and provide up-to-date banking information for their refund.”
It’s doubly important to get your 2020 taxes in early this year. Not only will you get a jump on receiving any refund you may be due, but also to be eligible for a possible third round of stimulus checks.
“If you’re going to have a refund situation, I think it would be very beneficial this coming filing season to file electronically,” National Taxpayer Advocate Erin M. Collins told The Washington Post. The Taxpayer Advocate service is an independent organization within the IRS, and helps taxpayers with problems they can’t resolve with the IRS.
3 You Can File Now
Even though the IRS has delayed the official start of tax season two weeks, that doesn’t apply to taxpayers. If you have all your paperwork and records ready, it’s best to get started ASAP.
“People can begin filing their tax returns immediately with tax software companies, including IRS Free File partners,” the IRS said in a statement. “These groups are starting to accept tax returns now, and the returns will be transmitted to the IRS starting February 12.”
The IRS anticipates nine out of 10 taxpayers will receive their refund within 21 days of filing electronically with direct deposit. That is, if there are no issues with their return.
4 Tips to Speed Things Up
The IRS offers the following tips for taxpayers to help speed refunds during the pandemic:
File electronically and use direct deposit for the quickest refunds.
Check IRS.gov for the latest tax information, including the latest on Economic Impact Payments, i.e., stimulus checks.
Those eligible for stimulus payments, should carefully review the guidelines for the Recovery Rebate Credit (see below). Most people received Economic Impact Payments automatically. Anyone who received the maximum amount does not need to include any information about their payments when they file. However, those who didn’t receive a payment or only received a partial payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return.
Remember, advance stimulus payments received separately are not taxable. They also do not reduce the taxpayer’s refund when they file in 2021.
5 Recovery Rebate Credit
The first two rounds of stimulus checks were distributed based on income information in your 2018 and 2019 tax returns.
If you lost your job in 2020 or your income dropped significantly last year, you may be able to obtain stimulus money you weren’t originally eligible for. In order to obtain this, your income last year must have been under the $72,000 threshold.
Even if it was above that, you still may be eligible for partial payment. So check the IRS website on the topic.
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Frequently Asked Questions
When did the IRS start accepting 2020 tax returns?
The IRS delayed the official start of the 2020 tax season to February 12. It needed the extra time to catch up on the prior year's backlog and add programming for the December 27 tax law changes that authorized more economic stimulus. However, taxpayers could begin filing immediately with tax software companies, including IRS Free File partners, with those returns transmitted to the IRS starting February 12.
How can I get my tax refund faster during the pandemic?
The IRS urges taxpayers to file early and electronically, and to choose direct deposit with up-to-date banking information. The IRS anticipates nine out of 10 taxpayers will receive their refund within 21 days of filing electronically with direct deposit, provided there are no issues with the return. It warns against sending returns in by mail during the pandemic.
What is the Recovery Rebate Credit?
The first two rounds of stimulus checks were distributed based on income information from your 2018 and 2019 tax returns. If you lost your job in 2020 or your income dropped significantly, you may be able to claim stimulus money you weren't originally eligible for through the Recovery Rebate Credit when you file your 2020 return. To obtain it, your income last year must have been under the $72,000 threshold, though partial payment may be available above that.
Are stimulus payments taxable or do they reduce my refund?
No. Advance stimulus payments received separately are not taxable, and they do not reduce the taxpayer's refund when they file in 2021. Most people received Economic Impact Payments automatically, and anyone who received the maximum amount does not need to include any information about their payments when they file.
Why should I file my 2020 taxes early?
Filing early gets you a jump on receiving any refund you may be due. It also helps you be eligible for a possible third round of stimulus checks. If you have all your paperwork and records ready, it's best to get started as soon as possible rather than waiting for the official February 12 start of tax season.
