"Financial Planning ... it's not always about money."

4 Tips and Tricks for This Chaotic Tax Season

David M. Brenner profile photo

David M. Brenner, ChFC®, CLU®

D. M. Brenner, Inc.
Phone : (858) 345-1001
Schedule a Meeting

The Internal Revenue Service has a long history of raising taxpayer ire, but this tax filing season could be one for the record books.


illustration by Sam Island .jpeg

illustration by Sam Island



With some 11.8 million paper tax returns from previous years yet to be processed by the IRS—many of which sat in heaps in trailers outside processing facilities for months—any 2021 return that requires a human touch or contains a simple math error could be backed up for months, delaying any refunds.

Meanwhile, millions of individual taxpayers are facing unique challenges preparing their returns this tax season, yet severe staffing shortages have crippled the IRS’ ability to field calls to answer questions.

A major challenge for taxpayers is how to report pandemic-related stimulus and advanced child-tax-credit payments on their 2021 returns. Normally, the child tax credit is claimed in full on a tax return, but the 2021 credit was partially paid out to many families last year.

“A lot of payments were directly deposited, and people don’t even know they got them, let alone how much,” says Jennifer Mosley, a senior tax partner at Seattle accounting firm Moss Adams, noting that many people will be surprised by a smaller refund, or may even owe taxes because the credit has already been issued.

Many other taxpayers are grappling with how to submit 2021 returns when their 2020 returns—or even their earlier ones—have yet to be processed.

“It’s an absolute disaster,” says Ryan Losi, executive vice president of Piascik, an accounting firm in Glen Allen, Va. “Taxpayers are seeing everything from not getting an IRS agent on the phone to getting erroneous letters saying they owe significant amounts, getting wrong information about what forms to file, and not having timely mailed tax payments applied to their accounts.”

It isn’t just taxpayers who file paper returns who are having trouble. People who file returns with errors also may get held up—and that’s potentially a significant group: Math errors flagged by the IRS rose to 11 million last year on 2020 returns from 1.9 million the prior year, mainly because of confusion over how to report the pandemic’s early stimulus payments.

The pandemic is responsible for many of the IRS’ problems. Administering temporary legislation strained resources, and the agency’s offices shut down for several months at the beginning of the pandemic.

But the problems predate Covid-19. Congress has nibbled away at the IRS’ budget for more than a decade, impairing the agency’s effectiveness. In its fiscal-year 2020, the IRS had 20% fewer full-time workers than it had a decade earlier, and yet the volume of returns has gone steadily up.

The telephone response rate has been dismal. Last year, the IRS had 16,000 workers charged with fielding 240 million calls—that’s some 15,000 each. Even before the pandemic, the response rate was low—about 35%. This year, the IRS reassigned 1,200 of its workers to the phones to help.

The inadequacy of resources is alarming for an agency tasked with so much, says Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center. “I never say never about the IRS’ ability to survive challenges, but we’re at a situation of biblical proportions,” she says.

Aside from collecting taxes and enforcing tax laws, the agency’s job is to translate new legislation into specific regulations and procedures that taxpayers can follow.

This is no small task, especially when laws are passed hastily by Congress.

For example, lawmakers scrambled to cobble together the Tax Cuts and Jobs Act in order to pass it before year-end 2017. While the IRS prioritized ironing out guidance on key provisions, it took until 2021 to issue final regulations on all 86 provisions, says Garrett Watson, senior tax policy analyst at the Tax Foundation.

The burden trickles down to individual taxpayers. Advisors and the IRS recommend the following moves to smooth the tax filing process.

1. Submit early, electronically, and opt for direct deposit

Individual taxpayers have a good chance of bypassing the logjams and headaches if they file electronically and as early as possible. Last year, 81% of tax returns were e-filed.

When taxpayers e-file, they should avoid making errors and opt for direct deposit. Any refunds could be issued within 21 days.

2. Time your calls to the IRS

The agency’s call center is open weekdays from 7 a.m. to 7 p.m. in all time zones.

While the IRS requests that taxpayers avoid calling and instead use irs.gov to find answers, if you must call, your best chance of actually reaching an IRS agent is before 9 a.m., Tuesday to Thursday, says Angela Anderson, an Atlanta-based certified public accountant and advisor.

3. Monitor your records online

Taxpayers can view their records by creating an account on the IRS website at irs.gov/account. Accounts should reflect any advance child-tax credits or stimulus payments.

4. Request a hold on your account

If you have an unprocessed return from prior years whose refund you intended to apply to a subsequent year, you may be getting erroneous IRS collection notices, says Moss Adams’ Mosley.

The situation can escalate to the point where the IRS withdraws funds from your bank account, she says.

“Avoid this by asking the IRS to put your account on hold until your returns are processed,” Mosley says.

Of course, to do this, you have to get in touch with the IRS. Keep a couple of aspirin handy.

Email: editors@barrons.com

David M. Brenner profile photo

David M. Brenner, ChFC®, CLU®

D. M. Brenner, Inc.
Phone : (858) 345-1001
Schedule a Meeting