Errors That Delay Tax Refunds

Errors That Delay Tax Refunds

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The IRS is understaffed and overworked which is why the IRS is pushing these reminders to speed the processing of tax returns. They’ll also speed up your refund.

File electronically. Taxpayers can use their computer, smartphone, or tablet to file their taxes electronically. Tax software guides people through each section of their tax return using a question-and-answer format. Enter information carefully. This includes any information needed to calculate credits and deductions. Using tax software should help prevent math errors, but taxpayers should always review their tax returns for accuracy.

Use the correct filing status. Tax software, including IRS Free File, also helps prevent mistakes when selecting a tax return filing status.

Answer the virtual currency question. The 2021 Form 1040 and 1040-SR ask whether at any time during 2021, a person received, sold, exchanged, or otherwise disposed of any financial interest in any virtual currency. Taxpayers should not leave this field blank but should check either “Yes” or “No.” See our Blog on this subject.

Report all taxable income. Underreporting income may lead to penalties, interest, delays, and possibly an audit. See our Blog on this.

Include unemployment compensation. The IRS says it is seeing situations where people are not including unemployment compensation they received in 2021 on their tax returns. Although a special law allowed taxpayers to exclude unemployment compensation from taxes in 2020, it was only for that year. Unemployment compensation received in 2021 is generally taxable, so taxpayers should include it as income on their tax returns.

Double-check name, birth date, and Social Security number entries. Taxpayers must correctly list the name, Social Security number (SSN), and date of birth for each person they claim as a dependent on their individual income tax return. Enter each SSN and individual’s name on a tax return exactly as printed on the Social Security card. This is a common error.

Double-check routing and account numbers. Requesting a direct deposit of a federal refund into one, two, or even three accounts is convenient and allows the taxpayer access to their money faster. Make sure the financial institution routing and account numbers entered on the return are accurate. Incorrect numbers can cause a refund to be delayed or deposited into the wrong account.

Mail paper returns to the right address. Paper filers should confirm the correct address but taxpayers and tax professionals are encouraged to file electronically if possible.

Sign and date the return. If filing a joint return, both spouses must sign and date the return. E-filers can sign using a self-selected personal identification number (PIN).

Keep a copy. When ready to file, taxpayers should make a copy of their signed return and all schedules for their records.

Request an extension, if needed. Taxpayers who cannot meet the April 18 deadline can easily request a six-month filing extension to October 17 and prevent late filing penalties Use Free File or Form 4868. But keep in mind that, while an extension grants additional time to file, tax payments are still due April 18 for most taxpayers. See our Blog on this.

Remember that Legal Tax Defense offers a free consultation if you have tax issues. Call now to speak to a tax attorney for FREE!

Disclaimer: Alan Mendelson is a well-known TV consumer news reporter who reports on tax issues. You should seek professional advice if you have tax questions or issues. 


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