Tax-filing season kicks off at rapid pace, IRS data shows
The Internal Revenue Service received 34.7 million individual tax returns in the first week of this year's filing season, around 20% of the total returns filed last season.
"I'm pleased to report the successful opening of the filing season at the first weekend we received 55 million submissions [individual and business returns] and at the peak we were receiving 335 submissions per second," IRS Commissioner Charles Rettig said at a hearing at the House of Representative’s Appropriations Committee on Tuesday. "We opened the filing season slightly later than in previous years to give us additional time to do additional programming and testing of our systems."
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Last year, the IRS received 15.8 million individual returns in the first week of the filing season, which started on January 31 compared with this year's delayed start of February 12. Similarly, the IRS got 16 million returns in the first week in 2019 and 18.3 million in 2018. Earlier figures don't necessarily show the first week's statistics.
Key changes this year — a later start, stimulus checks, and more generous tax credits for lower-income Americans — also make it harder to compare the average refunds from this year and last.
The average refund for the first week was $2,880 this year, which is higher than the $1,869 average return for the first week in 2020. But tax refunds from returns claiming the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) weren't held up as much this year because of the late start, potentially one reason behind the higher average. These refunds typically can't be issued until mid-February by law.
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This season, taxpayers will be allowed to use either their 2019 or 2020 income to determine eligibility for the CTC and the EITC — whichever year is most beneficial to them. To qualify for the credits, you must have earned income in 2020; unemployment benefits don't qualify.
So far, the tax season deadline hasn't been pushed past April 15 despite calls from lawmakers leaving taxpayers with less time to file their return and the IRS with less time to process them. In 2020, the tax filing deadline was extended to July 15 due to the health and economic challenges caused by the pandemic.
Last year, the IRS had to deal with the distribution of two rounds of stimulus checks on top of backlogs and the slow processing of 16 million paper tax returns last season, according to the National Taxpayer Advocate Erin Collins's 2020 annual report to Congress. The IRS had a backlog of over 7 million unprocessed individual tax returns as of December 31 and over 2.3 million unprocessed business returns as of November 24 of last year, the report found.
“The challenges created by the COVID-19 pandemic will continue through the 2021 filing season and possibly for months longer, affecting both the IRS and taxpayers,” Collins wrote in her report.
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The potential distribution of a third round of stimulus checks included in President's Joe Biden $1.9 trillion stimulus proposal could further complicate the tax-filing season and the issuing of refunds if the plan is passed soon.
Those who were eligible for a stimulus check but didn't get one or didn't get the full amount can claim this as a Recovery Rebate Credit on their federal tax return. The credit applies to both the first round of $1,200 stimulus checks sent in the spring and the second round of $600 checks sent in January.
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
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