Monthly News: February 2021
The IRS has been overwhelmed with processing tax returns and answering phone calls as a result of the pandemic.
The IRS phone lines are known for notoriously long waits during tax season in normal years. However, this is not a normal year.
The IRS is normally receiving calls about questions concerning the current tax year. But now the IRS is swamped from answering questions from people who have still not received their 2019 refund. At one point after the IRS shutdown from the Coronavirus, they had over 10 million pieces of mail to process.
Due to the shutdown, the IRS notices of penalties and interest were mailed to taxpayers later than normal. Consequently, people are calling the IRS later than normal to inquire about the late penalties and interest.
In addition to receiving calls about late refunds, the IRS is receiving calls from people who have not received their stimulus.
Rather than call the IRS, it can be much more efficient to obtain information by using the IRS website. The website provides information about the status of tax returns and can also be used if you need to know the amount of stimulus that you have received. The website can be used for other activities such as setting up an installment agreement. Using the website when possible can provide answers and solutions in minutes rather than waiting for hours or days.
There’s a new special tax deduction, available just for 2020 tax returns. The deduction is for up to $300, for cash donations made to qualifying charities. When you file your 2020 tax return you can claim the donation, even if you take the standard deduction. Almost 90% of taxpayers now take the standard deduction. So, this deduction will affect a lot of people. If you’re taking the standard deduction, don’t miss this deduction, when you file your tax return.
Everyone can apply for an identity-protection PIN to help prevent tax identity theft. You can use the “Get an Identity Protection PIN” tool on the IRS website.
Claiming the earned income tax credit on your tax return increases your chance of being audited. Make sure you know the rules if you claim the earned income tax credit.