The IRS is getting a late start to tax season this week after a very uncertain year.
Millions of people were laid off in 2020 because of the coronavirus pandemic, many of them receiving stimulus checks, unemployment benefits or support from unexpected areas.
"I expect a lot more people to see refunds this year because of lower levels of income," said Craig Fortin, a specialized tax preparer who represents filers in negotiations with the IRS, a position known as an enrolled agent.
Speed up Processing of Your Tax Return
The tax filing season begins this Friday. With the late start, some tax preparers expect more people to file early in the season, which is why taxpayers should start filling out tax forms now if they want to get a refund quickly.
"Avoid filing by paper if you can," Fortin said. "It's just going to cause you delay, delay, delay."
There are many services available to file your tax returns online, and you may even qualify to do so for free. IRS spokesman Raphael Tulino said the Free File program is available to people who make less than $72,000. He also recommends filing online to avoid delays, which is what happened in 2020.
"Last year was definitely a COVID environment," Tulino said. "We had some delays for refunds and opening mail and all that. The quickest way for a refund is direct deposit, e-file, paperless tax return."
Didn't Get a Stimulus Check? File Your Taxes for the Recovery Rebate Credit
Even if you didn't file tax returns for the last few years, filing this year might get you a federal stimulus check.
"It's 'Recovery Rebate Credit,' and that's an important line on the tax return this year for many people who will qualify for more or the whole amount," Tulino said.
Tulino said that, even if you received the first payment, you have to file a tax return to receive the second stimulus payment. The IRS also points out that stimulus checks are not taxable income.
"I had numerous clients that did not receive it," Fortin said. "It will be reconciled or a refundable credit on the 2020 tax return when it's filed."
Unemployment Assistance Is Taxable Income
While the stimulus checks are not taxable, unemployment assistance from state or local governments is taxed at the federal level.
"If you didn't have tax withholding taken out, you might see a surprise this year in terms of owing taxes," Tulino said. "That's because you didn't have taxes withheld."
Tulino said there will be misinformation passed along and people could try to trick you into giving up your personal information. He said all questions should be answered by a certified tax preparer who has a preparer tax identification number or by IRS.gov.