Although the tax season usually starts at the end of January this year, the tax return season is postponed until February 12, 2021. The delayed start date for individual tax returns gave the IRS time to run additional programs and tests for IRS systems after December 27, 2020, changes to tax law that allowed many taxpayers to make a second round of payments for economic impact and other benefits. This programming work is critical to ensuring that IRS systems are running smoothly, to minimize refund delays, and to ensure that eligible individuals receive any remaining stimulus funds as a refund credit when filing their 2020 tax return.
Electronic file for faster refunds
The average tax refund last year was more than $ 2,500. The IRS again assumes that nine in ten taxpayers get their refund within 21 days when filing electronically with direct deposit – and there are no issues with their tax returns.
More than 150 million tax returns are expected to be filed this year – the majority by April 15th. In order to expedite refunds during the pandemic, the IRS urges taxpayers to electronically make a direct deposit once they have the required information. To avoid delays in processing, people should avoid submitting paper returns whenever possible.
Taxpayers eligible for the IRS Free File could begin filing tax returns on January 15, 2021, although tax returns will not be submitted to IRS until February 12, 2021.
Under the PATH Act, the IRS cannot issue a refund using the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law provides this additional time to help the IRS prevent fraudulent refunds and claims from being issued, including against identity thieves.
The IRS expects many EITC and ACTC taxpayers to receive a refund in the first week of March if they make a direct deposit electronically and there are no issues with their tax returns. This would be the same experience for taxpayers if the filing season started in late January. Taxpayers need to check where my refund is to get their personal refund date.
Key dates for taxpayers filing a tax return
Important dates for taxpayers to consider for this year's filing season are:
- 15. January. IRS Free File will open. Taxpayers can begin filing tax returns through Free File Partners. Tax returns will be submitted to the IRS starting February 12th. Tax software companies also accept tax returns in advance.
- January 29th. Earned Income Tax Credit Awareness Day to bring valuable tax credits to the attention of many people – including the option to use previous year's income to qualify.
- February 12th. IRS begins the 2021 tax season. Individual tax returns are accepted and processing begins.
- February 22. Estimated date for updating IRS.gov Where’s My Refund tool for those claiming EITC and ACTC, also known as PATH Act return.
- First week of March. Tax refunds reach those requesting EITC and PATH Act Returns (ACTC) returns for those making direct deposit electronically and there are no issues with their tax returns.
- April 15th. Deadline for filing the tax return for 2020.
- 15th October. Registration deadline for those who apply for an extension of their tax return for 2020.
over Juanita Farmer, CPA
Juanita Farmer writes the Financial Cents blog.
Juanita Farmer. CPA is a managing partner of J. D. Farmer & Associates, LLC, an accounting firm based in Germantown, Maryland.
Ms. Farmer has worked in accounting and taxation for over 27 years.