Tax filing season is officially open.
Three tax seasons into the pandemic, the IRS is already dealing with a backlog of millions of returns because of staff shortages.
But don’t panic, CBS News business analyst and “Jill on Money” host Jill Schlesinger has tips for getting it all done.
What should families that received child tax credit money in 2021 keep in mind?
If you’re confused about the child tax credit, you’re not alone.
Many people received the child tax credit in six installments last year but only got half the money. To claim the rest, file it on your tax return, Schlesinger says. Check your snail mail for a 6419 letter from the IRS.
“Go to IRS.gov Child Tax Care Update Portal,” she says. “And you may even find that if you didn't get any advance payments last year, you may get a lump sum by claiming the child tax credit when you file this year.”
What about people who received stimulus payments?
Good news: Stimulus payments aren’t taxable.
People who didn’t receive a payment need to file for Recovery Rebate Credit — line 30 on Form 1040 — on their tax return, Schlesinger says.
“You'll also probably get a separate letter from the IRS about that as well, so keep an eye on that,” she says.
What do people who collected unemployment need to know about their tax filing?
Back in 2020, the American Rescue Plan provided a waiver for federal taxes on up to $10,200 in unemployment benefits. But that’s not the case for the benefits collected in 2021.
“If you did not withhold taxes from your unemployment payments, you might owe money or maybe just get a smaller refund this tax season,” Schlesinger says.
Look for Form 1099 to find out what you received and check your state’s rules, she says.
“Most states actually do levy taxes on unemployment benefits but check with your state because a handful, about 10-15, don't actually do that,” she says.
The IRS is underfunded and understaffed. What does this mean for tax season?
As the third pandemic tax season begins, there’s a lot of confusion at the IRS.
“The IRS has seen budget cuts where they've had a staff reduction of about 17% over the last dozen years,” Schlesinger says. “And they say that's amid a 19% increase in workload.”
Call volumes tripled in 2021 but the IRS could only answer 11% of them — and the average hold time was 23 minutes, she says.
“Spend 23 minutes on the IRS.gov website, I bet you will find a lot more information,” she says. “The agency cannot help you in the way that you would like to be helped.”
Will refunds be delayed?
Unfortunately, Schlesinger says yes.
The best way to get your refund is to file electronically, use direct deposit, and make sure child tax credit and stimulus amounts match the notices you received from the IRS, she says.
“If you need human eyes or hands on your file, you will be delayed,” she says.
This segment aired on January 24, 2022.