The 2020 tax filing season (for 2019 tax returns) was unique. Tax filing deadlines were pushed back in the middle of the preparation period, including the dates for making estimated tax payments. Many of the same factors that led to that situation are still in place and may affect what happens in the 2021 tax season.
2021 Tax Season: What to Expect
Electronic Filing
The Internal Revenue Service (IRS) suggests electronically filing a tax return. This is the quickest way to get a refund, especially if the taxpayer chooses to have the refund deposited directly into their bank account.
Normally, the IRS begins accepting electronic returns the last week of January. This year they have pushed that date back until February 12. Over the past few years, the IRS has fallen further behind because of government shutdowns and the restrictions in place because of Covid-19.
Additionally, tax law changes that dealt with Covid-19 at the end of 2020 caused the IRS to make changes to their software. They wanted to make sure it was up to date.
As a result, your return can be prepared but it will not be accepted by the IRS until that date. So, if a refund is expected, it may take a little longer than usual.
Some tax preparation services offer short term loans against a refund. If you need the money quickly and don’t want to wait for the refund, this may be an option. However, make sure to understand the fees and interest on these loans before agreeing to them. And make sure you use the refund, when received, to immediately pay back the loan.
Filing Deadlines
In 2020, the tax filing dates were pushed back. This caused a great amount of confusion as some dates were pushed back (April 15 to July 15 for personal returns) and some weren’t (March 15 for partnerships and S-Corporations).
At this point there is no plan to adjust the filing dates, but this could change. Some suggest this is necessary because of the ongoing effects of Covid-19 but others say no. For the moment, assume that the normal filing and extension dates are in place and plan accordingly.
Estimated Taxes
The dates for making estimated tax payments were also adjusted in 2020. There are no plans currently to adjust those for 2021 so plan on the normal dates of April 15, June 15, September 15, and January 15.
Dealing with the IRS
As mentioned, the IRS is very far behind. Many taxpayers who filed paper returns in 2020 are still waiting for refunds. This backup, however, hasn’t prevented the IRS computers from generating and sending various tax notices.
If a tax notice appears in the mail or you are wondering where a refund is and you choose to try and contact the IRS, be prepared for long wait times, sometimes even as long as an hour or more.
In many instances, their automated attendant won’t even process the call and simply says to call back another time. This applies for both taxpayers and tax professionals attempting to contact them.