The IRS enacts changes that will affect your tax refunds
BELPRE, Ohio. (WTAP) - Local Tax-Preparer Lonnie Bennett summed it up like this. “There is good and bad news this year. Actually, the good news is really good and the bad news is really bad. The bad news this year is that they’re putting off the tax season until February 12th.”
Bennett said this means refunds will be coming in late February rather than late January.
And if you have kids, early March.
In a press release, the IRS explained that this will give them time to enact anti-fraud and identity theft measures as well as put in place programming that will let people file for missed stimulus checks with their refund.
On another note, you may get more money than expected. Under typical rules, if you worked less last year, this would be what happens.
“Let’s say last year you had $25,000 in income and two kids. You got a lot of money in earned income credit and child tax credit. However, in 2020, your income dropped to half because you didn’t work half of the year so your money is going to be greatly reduced.”
However, this year isn’t typical.
Bennett explained that Congress has done two things that change that situation.
First, this year you’ll be able to choose whether your Earned Income Tax Credit will be based on your 2019 or 2020 income. This will bring in more money for people who were worked less in 2020.
Second, Bennett added, “..., Earned Income Credit and Child Tax Credit have been greatly increased last year so people are going to get a really big check this year. That’s the good part.”
Still, despite the well-intentioned delay, in a pandemic that has brought wide-sweeping financial hardship, there will be a fall-out.
Bennett said, “We have people come in who have down payments on cars and expect to use their refund to pay it off or down payments on houses or rent and they come in here and they’re wanting to get their money. It’s going to be delayed this year and it’s going to be a hardship on a lot of people.”
Bennett advised to file as early as possible. If you want your money earlier, you can apply for an advance. Still, this can be an expensive option. However, $500 and $1,000 advances are generally interest-free for most people.
Bennett warned to be careful of scams if you decide to use websites offering free processing and returns.
He also warned that filing via hard copy mail could result in getting your refunds even later.
In May, the IRS posted a notice encouraging taxpayers to use electronic options.
A July post read, “Taxpayers who file electronically and use direct deposit can expect their refund faster than those who mail a paper return, especially since the COVID-19 outbreak has reduced IRS staffing available to process paper returns.”
Consulting local tax-preparers is always another option.
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