The 2021 tax season has begun, along with a lot of confusion for those who haven't received their 2020 returns. If you're one of the unlucky people stuck in IRS limbo, here are some tips. We discuss the best times to reach the IRS and provide answers to other frequently asked tax questions.
Why Haven't I Received My 2020 Tax Returns?
The IRS expects to receive over 160 million individual tax returns for the 2021 tax season. And while the vast majority will receive their returns without issue, the agency is still experiencing a backlog of over six million returns from the 2020 tax year.
If you haven't received your return, it's most likely still due to Covid-related staffing shortages and office closures, combined with antiquated equipment and ongoing budget cuts within the agency. Even tax professionals are experiencing delays and difficulties affecting their clientele.
Should I File 2021 Taxes if I Haven't Received My 2020 Return?
The short answer is yes. You must still file a tax return with the IRS annually. The IRS recently confirmed that taxpayers can still file their 2021 returns while awaiting the finalization of their 2020 returns.
Should I call the IRS if I Have a Question?
Most of your questions can be answered via IRS.gov, but if you do need to call, avoid the beginning of the week – Wednesday through Friday are optimal days, as early as possible. The IRS is open Monday - Friday, 7 am-7 pm.
Can I Still Collect My Stimulus Money?
If you have still not received your 2021 stimulus money, you can claim the Recovery Rebate Credit on your upcoming 2021 returns. However, if you are still awaiting your 2020 stimulus money, you will need to file a 2020 return, or an amended return to get those payments. Do not file missing 2020 payments on your 2021 tax returns.
Should I E-File My Taxes?
Avoid paper returns if you can. The quickest way to get a return will be by filing electronically and receiving your payment via direct deposit. Even if you have to file later in the year, the IRS will allow taxes to be filed electronically with direct deposit capabilities up until November for some taxpayers.
Can I File My Taxes for Free?
If you have an AGI (Adjusted Gross Income) of less than $73,000, the IRS has free guided tax preparation via their providers. You can find a provider here. If you do not meet the AGI, you can still use their free forms.
Where Do I Find the Child Tax Credit Form (Letter 6419)?
If you received a child tax credit in 2021, most likely, you are still waiting on Letter 6419 to be able to claim the rest of your money. Millions of Americans are still waiting on this letter so they can get accurate numbers and complete their returns. If you have an account with the IRS, this information is easily accessible through the portal.
Having the incorrect number when you file could lead to your taxes being held for months or even into the next year while auditing takes place.
My Letter 6419 Total is Wrong. What Should I Do?
The IRS has stated that "...If the advance payments total differs between your Letter 6419 and your online account, rely on the total in your online account." The online account will have the most current advance payment information. Furthermore, they said, "do not rely on the Child Tax Credit Update Portal or Tax Transcripts for the advance payments total."
Do I Need an ID.me Account For the IRS?
As of this moment, no. But, you will shortly. If you have an existing IRS username and password not made through ID.me, be sure to create one because come Summer 2022, those usernames and passwords will no longer work. Along with accessing current and past tax records, having a portal can ensure you have the most accurate numbers when filing this year.
This is a trick that is often overlooked. The process of creating an account is simple. You will need to create an ID.me account via the IRS.gov website, which can come in handy for other websites, including the Social Security Administration, the Treasury, and multiple state portals across the US.
My Business Classification is Incorrect, How Do I Change It?
In the aftermath of the EIDL program, many businesses found themselves incorrectly classified with the IRS via their NAICS Code. You can learn more about your classification on the NAICS website. There is no government agency responsible for assigning this classification; therefore, there is no "official" way for a company to change its NAICS code — but it can be done.
If you have documents outside of your taxes showing an incorrect classification, you will need to contact the agency that assigned you the code and discuss changing it. The United States Census Bureau recently changed the structure of the NAICS code, so be sure you have the correct and most up-to-date information for your taxes. Changing the NAICS code on your taxes is the best way to modify your classification for most small businesses.
What Tax Forms Do I Use?
The IRS Free File program offers blank fillable IRS forms to everyone, regardless of income. Here is the list of IRS forms you will need.
- Form 1040 and Form 1040-SR are the standard income tax forms to report any income.
- Schedule A is for itemizing your deductions, any interest, medical expenses, etc.
- Schedule C - Small businesses report income from contracting work, 1099, or side work you may be doing. You will list your business deductions on this form as well.
- Form 4868 is used only when you need to file for an extension for more time. You can also file for an extension online through the Free File Program.
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