IRS tax-filing season to kick off on Jan. 24

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Signage outside the Internal Revenue Service (IRS) headquarters in Washington, D.C., U.S., on Friday, March 19, 2021. The IRS is delaying the April 15 tax-filing deadline to May 17, giving taxpayers an additional month to file returns and pay any out

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The Internal Revenue Service said Monday that it will begin accepting 2021 individual income tax returns on Jan. 24 – and administration officials are already warning of a "frustrating" season for taxpayers as the agency grapples with a backlog of returns from previous years.

"In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me," IRS Commissioner Chuck Rettig said in a statement. "IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us."

The difficulty this season stems from a massive backlog of paper returns: The IRS usually enters the tax-filing season with fewer than 1 million remaining items to address, but due to the pandemic and related disruptions, it has a much more severe accumulation of paperwork this year. Treasury officials did not provide an exact figure, but suggested that it was several times more than 1 million. 

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There are several reasons for the delays. The IRS was grappling with office closures as well as the Herculean task of delivering millions of stimulus checks in 2020 and 2021, all while trying to adapt major changes to the tax code in the middle of the filing season. The agency is also grossly understaffed; it has 20,000 fewer staff than it did in 2010, and its budget is roughly $11.4 billion – 20% less than it was in 2010, when adjusted for inflation, according to the Congressional Budget Office. 

On top of that, more than 20% of the IRS customer service workforce has been unable to work for pandemic-related health reasons related over the last two years.

Taxpayers will also have to reflect the monthly child tax credit payments and the stimulus checks they received in 2021 on their returns, further complicating matters and increasing the likelihood of errors and delays in processing returns.

Treasury Department officials urged taxpayers to file their tax returns as soon as possible, noting that individuals do not need previous returns in order to submit their 2021 returns. Americans are encouraged to file electronically with direct deposit in order to avoid potential delays and receive their return within 21 days. 

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The tax-filing season will end on April 18 this year for most individuals, rather than the usual deadline of April 15, because that's when Emancipation Day will be observed in Washington, D.C.

Taxpayers can request an extension online by filling out Form 4868 using the IRS’ "Free File" tool. You need to submit the form by April 18, or print the form and mail it to the IRS address for your state, making sure it's postmarked by April 18. 

It can give filers more time to thoroughly review their return and take advantage of all the tax benefits, like various deductions and credits, that are available to them to help them reduce their liability.

By pushing back the filing date, you can also avoid a failure-to-file penalty – an extra 5% per month on the unpaid amount, which can add up to 25% of the tax due. If you file for an extension, you have until Oct. 15 before the penalty starts accruing.

Experts caution that filing for an extension does not mean you can delay paying the government the taxes that are owed.

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