It's tax season. Here's what you need to know about filing
Let's face it: The process of filing taxes can be overwhelming. Especially this year.
VPR's Mitch Wertlieb spoke with tax consultant Seth Anderson of Shelburne-based Birch Tree Tax for tips on filing this tax season, including your refund timeline.
The following interview has been edited for clarity.
Mitch Wertlieb: Speaking of refunds, do you expect they will be delayed this year? I know there is a difference when you file your state and federal taxes. Are we looking at delays with both? If so, why?
Seth Anderson: So, I think Vermont's on track. They've handled this change much better than the IRS has, as far as timelines goes. So, I haven't heard of anything delaying Vermont, but the IRS, they have already given a warning that some refunds will be delayed.
And mostly it's these child tax credits. And the earned income tax credit, which is usually for — meant for lower-income people. They're very generous credits, and they're sometimes a target for fraud. So, IRS has to do some more manual checks on these.
And with the short staffing, and the fact that they're behind, I was just reading that there, they put out a statement saying that they have about 6 million returns to process from last year. Usually, they're at about a million behind, you know, million from the previous year. So, they're still processing last year.
We actually had a client that — about a year and a half ago — we filed a paper return, we had to file a paper return for them, and the IRS just got back to them. Because they're just processing those.
So, anything done on paper is taking a lot longer. These credits will potentially take a lot longer. And then if the taxpayer does not have the correct amount of stimulus payments that they received, or this advanced child tax credit on their return, those will most likely go into a more manual process with the IRS instead of computer. And those will most likely be very delayed.
Well, given everything you just said. Is that why the IRS is asking people, if they can, to file electronically?
Anything done electronically. And we have a liaison, an IRS liaison that covers Vermont, and he recommends any payments — a lot of people send in checks for payments — and they are recommending do everything you can electronically. And I would keep records of whatever you've done, too.
And then filing electronically is extremely important. Some people still want to file paper, and that's fine, but just recognize that it's going to take a lot, lot longer.
What about refunds for unemployment benefits? What can we expect on that?
So, Congress has made a habit in the last three or four years of making tax law after the tax year's ended, or even after we start filing tax returns, they changed the law.
Yeah. Because things aren't complicated enough.
Yeah, exactly. That keeps us on our toes, right? Like tax season isn't busy enough. And we need them to change the tax law.
So, I haven't heard anything about unemployment being — like last year, they exempted $10,200 for most people. And this year, I have not heard that.
So, let me ask this. What is the actual deadline for filing this year? Because we know last year, because of COVID, it got moved back. Are we still looking at traditional April 15 this year?
Yeah, I would have told you the same thing the last two years, though, about this time. It's actually April 18, because it falls on a holiday for Washington, D.C. So it's gotten pushed off to April 18.
And then in Maine and Massachusetts, that actually got pushed off to April 19, because of Patriots' Day.
But it takes a lot for them — I believe Congress has to actually change the date. I don't believe the IRS just has the authority to change the date. So it takes a lot to change the date.
Obviously, it's happened the last two years. As of now, it's still April 18. The only reason that it would change is the IRS is so far behind, like what I said of those 6 million returns, they might ask for it to be delayed. But from what I've heard from the IRS, they like the April 18 deadline, if they can stick to it, because it follows their schedule workload-wise.
Seth, let me ask a dumb question, please forgive me, because this stuff is mostly over my head, but you're doing a really good job explaining it for people like me.
But when I hear you say things like, you know, the IRS is like 6 million behind. You know, they have 6 million more claims to go through, etc. They're way behind, etc. Do you think that some people will be hearing that and thinking, "You know what, they're not going to get to me? I don't have to worry about this. They're too backlogged. I can push this off or maybe not file the way I should."
You know what I'm getting at here?
Yeah, that would be a mistake, in my opinion. I would file early and file electronically, if that's OK with you.
So, most people actually won't be affected, because computers do most of the work now. And so, if you file electronically, everything matches what the IRS has. You know, the stimulus payments are actually what you got. And if you have these advance child credits, these should go through, you know, normally, at least that's what the IRS is saying.
And that's what we've had in the past. So, I would expect two to three weeks for a refund, unless you have — like I said — the child tax credit.
The earned income credit, those may take, they're saying four to six weeks, maybe a little bit longer than that. But, you know, for most people, it's going to be a pretty smooth process, I believe. Because it's mostly done by computers. As long as everything checks out, it'll go through.