An estimated 160 million tax returns are expected to be filed this year, according to the IRS, and so far, the tax season has been running smoothly.
The tax agency has processed 6.6% more returns compared with a year ago, though it has received 2.1% fewer returns so far from taxpayers.
And according to Ken Corbin, wage and investment division commissioner and chief taxpayer experience officer for the IRS, the tax agency is well on its way to improve taxpayers’ experience for the 2023 tax year.
“So far we’ve received over 91 million individual returns this year and we’ve processed 89 million returns,” Corbin told Yahoo Finance Live. “What’s great about that is that we’re seeing that more taxpayers are getting our message. We’ve seen about a 96% electronic filing rate, which is outstanding.”
The IRS is still grappling with an unprecedented paper backlog of millions of unprocessed returns – some dating back to last year.
As of March 31, the tax agency had 2.7 million unprocessed individual tax returns dating back to 2021 and 2.3 million unprocessed returns from the calendar year 2022. Under normal circumstances, the IRS has a backlog of 1 million unprocessed returns entering a filing season.
To reduce the chances of further delays, the IRS urged taxpayers to electronically file their returns this year. The agency has also doubled down on measures to hire and reassign workers to get through the pile of unprocessed paper returns.
The IRS also redesigned its online website IRS.gov to make it more user-friendly so taxpayers could navigate and find information easily. The tax agency also added a new individual account that allows taxpayers to keep track of their personal information and tax status.
“The pandemic has really given us an opportunity to sit back and think about the journeys of the taxpayer as they interact with the IRS,” Corbin said. “It’s an opportunity to be innovative but to also bring cohesion around how we administer the taxes… we’ve introduced new technology like voice and chat bots on our phone as well as IRS.gov. And we’ve implemented taxpayer experience days, where taxpayers can come into our offices and talk with us [on the weekend].”
If you have yet to file your tax return this season, and want to avoid any substantial delays with your refund, you should file electronically.
National Taxpayer Advocate Erin Collins recently told Yahoo Money that filing a paper return could delay your tax processing for 10 months or longer. This can be a real set back if you’re waiting on a refund or the remaining portion – if not the complete amount — of your Child Tax Credit.
“Number one, file electronically and use direct deposit – there are lots of options out there, including our IRS free-file program,” said Corbin.
Folks that received an advanced CTC payment last year or collected unemployment were encouraged to use the IRS.gov personal account to check how much they received in aid before filing, so their returns wouldn’t be held for a manual review, said the IRS.
Take advantage of IRS resources
The IRS has implemented a variety of programs to help individuals file their taxes as zero cost.
“More taxpayers seem to be seeking help in filing their returns, whether they are going to a tax professional or even using our Volunteer Income Tax Assistance program, where we offer free tax prep for taxpayers,” said Corbin.
VITA programs are run each year by IRS-certified volunteers to ensure lower-income households can get the tax preparation and services they need to file accurate tax returns and get their refund. VITA resources can also help non-filers claim tax credits they may be eligible for, including the Earned Income Tax Credit, the Child Tax Credit, and any stimulus checks they may not have received.
Still, the IRS recognizes that there is still work to be done to avoid the jammed paper backlogs it is currently contending with.
“We have to be sensitive to those taxpayers whose returns have not been processed – it’s critical to them,” Corbin said. “There are refunds in those returns and there are other reasons why people need those returns processed either for financial aid for college students or to obtain a loan. What this means for these taxpayers is that their experience has been a challenging one.
But at the IRS, we’re all hands on deck. We have a plan so that we can get better than healthy by the time we get to the 2023 season.”Tax day is right around the corner and if you haven’t filed yet, putting together your return in a rush may come back to bite you.
“You should never rush through the process of having your tax return prepared because you want to make sure that your tax return is complete and accurate,” Daniel Geltrude, founder of Geltrude & Company, recently told Yahoo Finance Live (video above). “The last thing that you want is you file your tax return in a rush, and then in 30 days you get a nice letter from the IRS saying there was a problem with your tax return.”
If you need more time to file your tax return, you can request for an extension that gives you until October 15 to file your taxes. But you must file your extension request by the April 18 deadline.
If you owe the IRS and need extra time to file your return and to pay, then you need to request an extension to file and an extension to pay. If you owe and only request an extension to file, you may face penalties and interest on the amount you owe.
If you are filing by mail and are waiting until the deadline to pay, a postmark alone may not be sufficient.
“As long as the envelope is properly stamped by the due date — April 18th — sending your check through the mail at that last moment you’re okay,” Geltrude said, noting, “you should also do that by certified receipt to make sure that you can prove timely filing and timely payment.”
Working remotely and the home-office deduction
Due to the pandemic, many people worked from home. Unfortunately, working remotely from home doesn’t mean you qualify for the home-office deduction.
“If you are an employee getting a W-2 for the work that you do, you are not entitled to take those home office deductions as an employee,” Geltrude said. “You need to be an independent contractor having your own business to take all of those expenses related to your business activity as a deduction against your income.”
Gabriella is a personal finance reporter at Yahoo Money. Follow her on Twitter @__gabriellacruz.
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