Taxes

Tax season 2022 will be an IRS nightmare. How to avoid refund delays and other headaches

Americans can start filing taxes today. But the IRS is still facing tax return backlogs and staff shortages.

The pandemic put an unprecedented burden on the tax agency in the last period. 
Angela Lang/CNET

This story is part of Taxes 2022, CNET's coverage of the best tax software and everything else you need to get your return filed quickly, accurately and on-time.

Tax season kicks off Jan. 24. That means taxpayers can officially start filing their 2021 tax returns with the Internal Revenue Service today. But there are signs the agency isn't prepared to handle the strain.

Citing a mountain of unprocessed returns from last tax season, IRS Commissioner Chuck Rettig said in a statement this month: "In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs." He also noted the agency's inability to respond to a record number of phone calls. 

Retting called the situation "frustrating for taxpayers, for IRS employees and for me." 

During the pandemic, the IRS has taken on unprecedented duties -- like issuing 478 million stimulus payments and sending out $93 billion in advance child tax credit payments to more than 36 million families. Agency employees have been working overtime to tackle the massive backlog, but they're juggling a lot.

"IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us," Retting added. 

Mark Steber, chief tax information officer at tax service Jackson Hewitt, says the agency has been facing systemic issues well before COVID-19. Since 2010, the number of individual returns had increased nearly 20%, while the agency's workforce has shrunk 17%.

"It has been underfunded, understaffed and underresourced for decades, and it's not kept pace with technology," Steber told CNET. "That's not new."

In her 2021 Annual Report to Congress, National Taxpayer Advocate Erin Collins indicated she was "deeply concerned" about the 2022 tax season, saying, "The imbalance between the IRS's workload and its resources has never been greater."  

As taxpayers, we can't fix the issues plaguing the IRS, but here are crucial steps you can take to ensure your return is processed promptly and that your refund comes as soon as possible.

For more, find out about important dates to remember for filing your return, the best tax software to use and how you might qualify for filing your taxes for free.

idme

Sign up with the ID.me identity verification service.

ID.me

Set up an ID.me account with the IRS online

The IRS originally used ID.me verification for its child tax credit tools but has since expanded it to include making and scheduling payments, monitoring stimulus payments and managing authorization requests from tax professionals. By the end of this year, the agency expects that ID.me verification will be needed to access most areas of your IRS account.

"I can't overemphasize setting that up that ID.me account," said Steber. "It's the way of the future."

File electronically

"Paper is the IRS's Kryptonite, and the agency is still buried in it," Collins said in her report. 

In part because of the pandemic, nearly 95% of taxpayers filed electronically last year. "But that still works out to 15 or 16 million paper returns," Steber said.

According to the National Taxpayer Advocate, as of the start of this year, the IRS had a backlog of some 6 million unprocessed individual returns, plus more than 2 million amended returns. And many taxpayers are still waiting for their refunds nine months later.

Once you have all the information you need to complete your taxes, filing electronically will help avoid delays in the processing of your return and the issuing of any refunds or tax credits. It's also more secure: "Some people have this idea that their information isn't safe online, but it's much safer than printing it out and sending it through the mail," said Steber.

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Tax refunds through direct deposit will come faster than a check in the mail.

Angela Lang/CNET

Set up direct deposit for your refund and credits

The IRS says you'll get your refund faster if you combine electronic filing with direct deposit. Last year, most people who filed electronically and didn't have errors on their returns got their refunds in their bank accounts within 21 days. 

"Even if you don't have a bank account for whatever reason, get banked temporarily with a debit card, green dot or other financial product," said Steber. "It's faster than waiting months for a check in the mail."  

Direct deposit is also smarter given how many people have moved during the pandemic. "You can move all over the country -- an electronic deposit will find you," Steber said.

Find answers online rather than calling the IRS

Between questions about processing delays, missing refunds and child tax credit payments, the IRS handled a record 282 million calls in 2021, or nearly triple the number from the year prior. Customer service representatives only answered about 11% of them, according to the National Taxpayer Advocate, with hold times approaching a half-hour.

"Our phone volumes continue to remain at record-setting levels," Rettig said in a Jan. 10 press briefing. "We urge people to check IRS.gov and establish an online account to help them access information more quickly. We have invested in developing new online capacities to make this a quick and easy way for taxpayers to get the information they need." Beyond IRS.gov, the agency urges taxpayers to use the Interactive Tax Assistant, an automated online tool that answers common tax questions, including whether you qualify for certain credits and deductions.

Steber says there's also a wealth of reliable information online produced by nongovernmental entities. "There are videos, checklists, walkthroughs. There are lots of good websites, not just Jackson Hewitt's, that can educate you." 

If you do need to call the IRS, its dedicated regional phone lines operate Monday through Friday, from 7 a.m. to 7 p.m. local time. Individuals can call 800-829-1040 and businesses can call 800-829-4933. 

File early and be accurate

The IRS is now accepting 2021 tax returns. If you have all your paperwork in order and you're getting a refund, it makes sense to file as soon as possible, Joe Burhmann, senior financial planning consultant at eMoney Advisor, told CNET previously. "From a planning perspective, the IRS likes that."

If you owe money, you might want to wait to send your return, but you should still prepare your paperwork as soon as possible. 

"Knowledge is always a good thing to have," Burhmann said.  

You shouldn't even have to wait for your W2 to come in the mail, Steber said. Most larger employers let you log onto an intranet site and get your data electronically.

Even more than before, the IRS urges people to make sure their return is accurate to "avoid processing delays, extensive refund delays and later IRS notices." This is especially true of people who received a third Economic Impact Payment or advanced CHild Tax Credit last year. You can always confirm the amounts of your payments on IRS.gov.

Work with a professional tax preparer

About 44% of Americans file their own taxes online, said Steber. For people with straightforward tax situations without dependents, major investments or charitable contributions, that's probably fine. But the pandemic made many Americans' tax situations more complicated. "You might have gone freelance or moved and now owe taxes in multiple states," Buhrmann said. Last year, 26 states with an income tax altered their codes, Burhmann added, so the changes aren't just impacting federal taxes. 

That means it might make sense to hire an accountant to help you sort through the rules. 

"Tax pros have had a year to get ready," said Steber. "We've been training our preparers that if their client doesn't know the answer to something, they've got to probe. We're not relying on guessing or fudging estimates. That will get you stuck in three months of resolution."

There's cause to be hopeful

In her report to Congress, Collins called 2021 "the most challenging year taxpayers and tax professionals have ever experienced."

Tens of millions of taxpayers experienced delays in the processing of their returns, Collins indicated. And with more than 77% expecting money back, those delays "translated directly into refund delays."

But the agency has done an impressive job under enormous pressure, Steber said -- issuing stimulus payments with 99% accuracy and rolling out child tax credits, an unprecedented program, in under three months.

There's hope on the horizon, too. President Biden's Build Back Better Plan, which passed in the House in November but has stalled in the Senate, includes $79 billion in new funding for the agency.

And the Taxpayer First Act, signed into law in 2019, includes critical technical and personnel improvements for the IRS, as well.

"We talk with a lot of frequency about what the IRS can do better, but they've made a big dent in the backlog and they've rolled out a lot of new tools,'' said Steber.

"They're in their third year [of the pandemic] like we are, and they've learned a lot from what's happened before," he added. "They've been focused like a laser on this -- I'm bullish that this is going to be a transformative year. But it's in our hands, too. As taxpayers we've got to be accurate and [file] early."