HOUSTON - Taxpayers can now start filing their 2021 tax returns. But the IRS is warning that it may face delays in processing.
The IRS encourages taxpayers to wait to file their returns until they receive the following two letters:
- The total monthly payment parents received for the Child Tax Credit
- The amount the taxpayer received for the third stimulus check
If your tax return numbers match the numbers on these letters, it's likely to be processed faster.
The IRS is warning it still has a backlog of more than 10 million unprocessed individual and business tax returns from previous years, and 20,000 fewer employees than it had in 2010.
"What that means is paper is not our friend. If you file electronically, and you don’t make any mistakes on your return," explained IRS spokesman Michael Devine, "it just sails right through."
But Devine says if your numbers differ, or you file on paper, "a person has to be involved. And once a person has to be involved, the whole thing just sits until that person can look at it."
The IRS is sending parents form 6419, showing how much of the Child Tax Credit they already received in payments. Parents can claim the rest of the credit on their tax returns.
"That was an advanced payment to them, so they’re going to have to reduce the child care credit on their tax return," said CPA Ed Gardner.
Form 6475 will list the amount you received for the third stimulus check.
"If they didn't get the payment, they can get that on the 2021 tax return," said Gardner.
Last year's exemption for the first $10,000 in unemployment benefits has ended.
"You were able to exclude up to $10,200. Well that didn’t get extended to 2021, so your unemployment income will be taxable," said Gardner.
You can deduct up to $300 per individual for charitable contributions, and educators can deduct up to $250 for school supplies, even if you take the standard deduction.
If you're still waiting for a previous year's refund, the IRS says phone lines are still very busy. Instead, Devine recommends checking your IRS account online.
"This is the same information our telephone assisters would be looking at if you called and got through," he said.
This summer, the IRS plans to start using facial recognition for you to access your IRS account online.
The IRS says this will not impact your filing your taxes this Spring or thereafter.
But to access your IRS account online, you will need to create an account with identity verification company ID.me.
We asked technology expert Matt Binder with Mashable to explain how this might work.
"Basically, you're going to need to give them your personal information, name, address," Binder listed.
"On top of all that, you’re going to need to take a photo and also a live selfie, a video selfie basically to confirm who you are. The whole point, according to the IRS, is to cut down on any sort of fraud," said Binder.
He says you would be able to use a cell phone camera or a webcam to take the images.
Privacy advocated have raised some concerns that the IRS might be opening doors to potential data breaches.
Some states, including Texas, have used ID.me to verify identities for unemployment benefits. This cut down on a lot of fraud, but Binder says some applicants complained they could not access their benefits.