The 2021 Tax season is quickly approaching, and AXOS 1099-Rs are in the mail and available online. As time time get going, our goal is to provide you with the tools needed to help ensure that your returns are filed promptly and accurately.
Due to COVID, an IRS staffing shortage, and errors reporting stimulus payments, many taxpayers experienced a significant delay in receiving their 2020 refunds. Additionally, since the IRS received over 240 million phone calls during the first half of last year it was nearly impossible to connect with an IRS agent. Those taxpayers with questions about their missing refund were left to check the IRS website which didn’t offer many additional details.
To avoid these delays in 2022 we recommend the following:
1. Start collecting your information early.
a. The sooner your information is collected the sooner your return can be filed, and refund processed. Remember, 1099’s for nonqualified (non-retirement) accounts are often provided (or corrected) in March.
2. Electronically file your return & use direct deposit for refunds.
a. Paper returns must be reviewed by an individual which often results in a delay. Electronically filing your return is the simplest and most efficient method of filing.
b. Refunds sent via direct deposit will be received faster than a check.
3. Understand your Child Tax Credits and stimulus payments (if applicable).
a. A common error when filing in 2021 (2020 Tax Return) was not reporting or incorrectly reporting the amount received via economic impact payments (stimulus).
b. This year, the IRS sent out two letters to help taxpayers appropriately report their stimulus payments and Advanced Child Tax Credits. Should you receive either of the letters below please store them with your 2021 tax file as they will be needed to accurately file your return.
IRS Letter 6419 reports the number of dependents and amount of Advanced Child Tax Credits that the taxpayer received.
IRS Letter 6475 will help Economic Impact Payment recipients determine if they are entitled to and should claim the recovery rebate credit on their 2021 tax returns when they file in 2022.
If you didn’t receive these letters or have misplaced them, you can find the information on irs.gov.
4. Consider applying your 2021 tax refund as a tax payment for 2022. Applying the refund as a tax payment for 2022 will reduce the amount that you need to have withheld through payroll deductions or investment distributions.