IRS Tax Return: Refund Delay Possible For Returns Filed By Paper Forms

Tax season is in full swing. The IRS started accepting 2021 tax returns last month. This year, you'll have an additional 3 (or 4!) days to get your returns in. But the IRS warns you may want to start early.

"Tax Day," or the deadline to file your taxes is April 18, 2022 because of the Emancipation Day holiday in the District of Columbia. If you reside in Maine or Massachusetts, you have until April 19 to file tax returns beacuse the Patriots' Day holiday falls on the 18th.

Even though the tax deadline has been extended this year, it's not too early to start your return. That's because the IRS is still processing millions of tax returns from last year and have warned that they could be late again this year. Best bet is to file your taxes online. Here's why:

Why are there tax return delay?

The IRS tax return backlog started in March 2020 when IRS offices to shut down for health and safety related concerns as the pandemic started. The IRS says many of the backlogged tax returns are related to people who filed their 2020 tax return by paper forms. According to CBS News, returns filed by paper were put into storage trailers until IRS employees were able to return to work to access them.

In their annual report to Congress, the National Taxpayer Advocate office described issues the IRS had processing tax returns last year. The report also warned that processing and refund delays could also plague this year's tax season.

"2021 was surely the most challenging year taxpayers and tax professionals have ever experienced," National Taxpayer Advocate Erin M. Collins wrote in the report. "The IRS is in crisis and needs to apply resources to its core mission – processing these returns and paying the corresponding refunds."

The report states that as of mid-December the IRS still had 6.2 million unprocessed individual tax returns and 2.8 million unprocessed business tax returns. These numbers don't include the nearly 3 million amended returns for both individuals and corporations. The report also stated it had nearly 5 million pieces of taxpayer correspondence to go through.

While paper forms make up the bulk of the backlog, there are still many taxpayers waiting for resolution of the tax returns they filed electronically in 2020. Changes to rules around the Earned Income Tax Credit and new Child Tax Credit have contributed to these delays.

But the pandemic isn't the only reason for tax return delays. The IRS budget was reduced by about 20% between 2010 and 2021. As a result, the IRS lost about 33,000 full-time employees. Since the COVID pandemic began, the IRS lost even more employees. These staffing shortages are listed as the second of 10 "most serious problems" in the report.

How to Get My Tax Refund on Time in 2022

Most Americans get a tax refund from the IRS every year. For around 75% of all Americans, many times that IRS tax refund check is the biggest they see that year so people have to to rely on the timeliness of their refund.

To avoid a tax refund delay, the IRS encourages all Americans to file their 2021 tax returns online and as soon as possible. According to the IRS frequently asked questions, if your tax return is correct and has no issues, your refund should be issued in about 21 days if you file your return electronically and choose direct deposit. 

The recently passed economic stimulus package brought changes to the Earned Income Tax Credit and Additional Child Tax Credit which allows taxpayers to claim credits based on 2019 income levels instead of 2020. If you're taking advantage of the stimulus package provisions, the IRS says your tax refund will likely take longer than 21 days.

What Do You Need To File Your Taxes?

To avoid a tax return or tax refund delay, start gathering your information now. Some employers offer online retrieval of tax-related information. If you're not familiar with what you'll need, look at your previous tax return as a guide. 

The most common forms taxpayers will need:

• W-2s Forms employers

• 1099 Forms if you are self-employed or an independent contractor

• 1099-G Form if you had unemployment benefits in 2021 (Sent from unemployment department)

• Form 6419 if you received the child tax credit (Sent from the IRS)

• Form 6475 if you received a stimulus check in 2021 (Sent from the IRS)

• 1098 Forms from banks and schools if you paid mortgage or school loan interest

File Your Taxes Online Electronically 

IRS File For Free

The IRS Free File program is now open. This program allows taxpayers to file their 2021 tax returns online for free if they made $73,000 or less in 2021 (Adjusted Gross Income). The guided preparation does all the computations when you answer simple questions. 

To file your taxes for free, you must begin your filing at IRS.gov and chose from the companies in their program. Starting the process at any other company's website or using a third-party software can result in not receiving the free file benefits the IRS website offers.

TaxSlayer

TaxSlayer also offers selveral tax filing options, including their Simply Free option. With TaxSlayer's "zero out-of-pocket fees" feature, you can start your tax return for free. Then, deduct the cost of the TaxSlayer software from your federal refund instead of paying for it up-front. TaxSlayer also offers a free app to file and track your refund.

TaxSlayer is also one of companies on the IRS Free File Online list. To use it completely for free, you must have an adjusted gross income of $39,000 or less. One state return is also included for free.

TaxSlayer: $0 to $48

TurboTax Software 

For over 30 years, TurboTax has been helping people file their taxes and are often ranked as the best-selling tax software. TurboTax asks you a few simple questions to help you with your taxes. Based on your answers, finds the right tax forms and fills them out appropriately. 

On Sale Now: Save $20 on TurboTax Deluxe (Now only $39)

TaxAct Tax Software

 With several options for free for students and simple tax filers through versions for homeownes and self-employed freelancers and business owners, TaxAct is another software option to help you file your taxes online. TaxAct offers satisfaction and accuracy guarantees.

H&R Block

H&R Block has options for DIY file your taxes online or using tax expert to help you. Assistance can be given virtually or in-person and starts at $80. You can even drop your taxes off and have them do the rest.