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5 reasons why your tax refund may be delayed

Stimulus checks, staff shortages creating backlogs
Tax Season Begins
Posted at 3:05 PM, Mar 15, 2021
and last updated 2021-03-15 18:16:31-04

It's a new year, but many of the same old problems remain when it comes to tax filing.

A month after the IRS started processing returns, complaints are already coming in about late refunds.

Heather Niehaus is a busy mom of a 2-year-old girl, and every dollar counts at her home.

So she filed her taxes as soon as she could this year.

"I was an early filer," she said. "I filed online at the end of January as soon as I got my W2."

But a month and a half later, she hasn't seen anything yet.

Reasons for delays

The IRS got a late start processing returns this year due to the early January stimulus checks and did not start taking returns until February.

But even with that, Niehaus said her refund is now four weeks late.

"It got accepted by the IRS on the 12th of February when they got my return," she said. "But I still haven't gotten mine back."

The Government Accounting Office (GAO) is warning of several issues right now, that could mean late refunds.

1. It turns out that many of the pandemic staffing issues that hit the IRS hard last year are still not resolved; pandemic-related staffing shortages remain, and employees are still working from home.

2. With another round of stimulus checks now being sent, the agency is again being flooded by thousands of daily phone calls. So the IRS is trying to juggle multiple jobs at once.

3. The IRS reports continued mail delays, and leftover returns from last year still tying up the IRS computer systems.

4. If you claimed a stimulus check (either $1,200 or $600), the IRS needs to take an extra look at your return, to make sure you are not "double dipping" and getting that stimulus twice. That can add a few weeks to your refund.

5. If you collected unemployment benefits, the IRS must have a state report on how much you received. The agency says some of those state reports are late.

What you can do

Forbes magazine says to increase your chance of getting a refund quickly:

  • File as soon as possible, and do not wait until April.
  • File electronically.
  • Request direct deposit of your refund.
  • Check the Where's my Refund feature frequently. (You can try calling the IRS at 800-829-1040, but getting through in recent months has been next to impossible.)

For Niehaus, though, it's all a lesson in frustration.

"It still says it's processing," she said. "And they said possibly it could be another two weeks."

Bottom line: Get those returns done soon, so you don't waste your money.
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NEW TAX LAW

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That said, many folks are wondering what’s in the bill and how it might affect them. Here’s a recap of some of the major tax provisions in the new tax bill and how they may impact you.

Increased Standard Deduction: The new tax law nearly doubles the standard deduction amount. Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,000 for 2018 taxes (the ones you file in 2019). Married couples filing jointly see an increase from $12,700 to $24,000. These increases mean that fewer people will have to itemize. Today, roughly 30% of taxpayers itemize. Under the new law, this percentage is expected to decrease.

Increased Child Tax Credit: For, families with children the Child Tax Credit is doubled from $1,000 per child to $2,000. In addition, the amount that is refundable grows from $1,100 to $1,400. The bill also adds a new, non-refundable credit of $500 for dependents other than children. Finally, it raises the income threshold at which these benefits phase out from $110,000 for a married couple to $400,000.

Personal and Dependent Exemptions: The bill eliminates the personal and dependent exemptions which were $4,050 for 2017 and increased to $4,150 in 2018. State and local taxes/Home mortgages: The bill limits the amount of state and local property, income, and sales taxes that can be deducted to $10,000. In the past, these taxes have generally been fully tax deductible. The bill also caps the amount of mortgage indebtedness on new home purchases on which interest can be deducted at $750,000 down from $1,000,000 in current law.

Health Care: The bill eliminates the tax penalty for not having health insurance after December 31, 2018. It also temporarily lowers the floor above which out-of-pocket medical expenses can be deducted from the current law floor of 10% to 7.5% for 2017 and 2018. So for 2018, you can deduct medical expenses that are more than 7.5% of your adjusted gross income as opposed to the higher 10%.

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Don’t worry about memorizing these tax changes the majority of which are for 2018 taxes that you file in 2019. Fastax has you covered and will be up to date with the latest tax laws. Call us for tax help at 661 493-8512