Personal Finance

How to keep your tax return from getting hung up

There may never be a good time to draw the IRS’ attention, but this year you really want to avoid extra scrutiny.

The IRS is so understaffed and overwhelmed that even a tiny mistake could delay your refund for months. A return that requires “manual processing” — basically, any action by an IRS employee — could join a massive queue that started building at the beginning of the pandemic and has yet to be resolved. If something goes wrong, good luck getting through to a human: The IRS answered about 1 in 10 calls last year, down from about 1 in 3 before the pandemic, according to the National Taxpayer Advocate.

To avoid tax hassles, the best approach is to be careful, thorough and digital when you file your return.


DON’T FILE A PAPER RETURN OR ASK FOR A PAPER CHECK

Let’s start with the basics: File electronically and request direct deposit of any refund you might be due, says April Walker, lead manager for tax practice and ethics with the American Institute of CPAs. If your income was $73,000 or less in 2021, you can use the IRS’ Free File tax preparation option.

If you file electronically, you can begin tracking the status of your refund on the IRS site within 24 hours , says CPA Lei Han, associate professor of accounting at Niagara University in Niagara Falls, New York. If you file a paper return, tracking typically won’t be available for four weeks, Han says.

Paper returns don’t just take longer to process, notes Kent Lugrand, president and chief executive of InTouch Credit Union in Plano, Texas. Paper returns are also much more likely to contain errors — either that a taxpayer made or that an IRS employee introduced while transferring the data from a paper return into the agency’s computer system. Electronic filing, by contrast, won’t let you file a return with many common mistakes such as mathematical errors or failing to sign your return. You have to fix those before you can submit the return, Lugrand says.

E-filing software may not detect other problems, such as incorrect Social Security, bank routing or bank account numbers, so check all numbers carefully, Walker recommends.


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