Early Bird Tax Filers Will Not Get The Worm This Year

Jan. 26, 2021  By Timothy Perry

Congress approved some year-end tax changes in December as part of the COVID Relief Act that have forced the IRS to push back the start of tax filing season by over 2 weeks. The Internal Revenue’s start date is not until February 12 this year, well beyond the late January date on which they typically start processing returns.

Why does this matter? For some it does not. But for those for which it does matter, it matters a lot and for multiple reasons.

COVID-19 has affected some people more negatively than others. Minority populations have been hit particularly hard by the pandemic because many of their jobs cannot be done from the relative safety of their homes. Blue-collar job losses are disproportionately higher, and the working poor have been hit much harder than top income earners and white-collar workers in this fluid Covid-19 economy.

Many Americans are only a few hundred dollars away from not being able to pay their rent or mortgage payment. The number of people who are currently food insecure has spiked dramatically since March 2020. Many of the people now finding themselves getting their meals from food banks and through other means of public assistance had never encountered food insecurity before the pandemic. For those taxpayers waiting to put food on their family’s table, or pay rent with their refund checks, receiving that money 3 weeks later will feel like an eternity and may have dire consequences.

Those expecting a refund of personal income taxes are not the only ones who will wait. Low-income taxpayers who qualify for the Earned Income Tax Credit or the Additional Child Tax Credit will also have to wait longer to receive their money. The IRS plans to send out those refunds the first week of March.

And perhaps the most frustrating of all, the millions of Americans who did not receive their stimulus relief money months ago and therefore qualify to receive a Recovery Rebate Credit on their 2020 tax return will also wait.

As to be expected, this is shaping up to be another challenging tax season for the Internal Revenue Service, which has struggled in recent years with reduced budgets that have forced it to make do with a slimer workforce and outdated technology. The toll the pandemic has taken on the IRS’s human resources coupled with the need it has created for new systems and software to keep up with the myriad of coronavirus relief package related tax code changes have exacerbated their troubles.

The silver lining? Despite all this, the IRS anticipates that most taxpayers due a refund for the 2020 tax year will get it within 3 weeks if they file electronically and have the money direct deposited into their bank account. Filing by mail not only kills trees but it kills time. If you want your money quick, file electronically because filing by paper will slow you down by weeks not days!

Refunds have averaged over $2,500 in recent years and many families count on those refunds to pay bills or to make the year’s most significant contribution toward savings or retirement. This year’s refunds will prove more important than ever as they will be a much-needed lifeline to so many Americans that have suffered economic loss as a result of the global pandemic.

Oh, and for those procrastinators and people who would like to delay because they owe money… the tax filing deadline has not been pushed back this year like in 2020. That famous date has returned. April 15.

Please read our Update of this Blog in the following link:

"The IRS Postpones Tax Deadline For 2020 Tax Year - What Was Not Extended"