- If you're expecting a tax refund,
the most common advice is that you should file
your tax return as soon as possible.
There is no reason to let the government keep
your money any longer, but for some filers this year,
your early tax return will be delayed for a variety
of reasons, including new laws, ID theft,
and more.
In this video, we're gonna discuss
these potential delays and what you can expect to deal with
as a filer this year.
Hey everyone, this is Andy with The College Investor,
Investing and Personal Finance for Millennials.
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Thanks.
Over the last few years,
identity theft related to taxes has exploded.
In order to reduce possible losses from identity theft,
Congress passed a law that forces the IRS
to delay issuing refunds
for people claiming certain deductions,
the ones likely to be used by identity thieves.
And in 2022, there's another reason
your tax refund will be delayed.
New legislation, thanks to you guessed it,
the COVID 19 pandemic.
Specifically, a lot of early filers
are gonna struggle with issues
because of the advanced child tax credit.
The sad part is though that many honest people
may see their tax returns delayed by several weeks.
Now that's not detrimental,
but it is a longer wait than previous years.
In fact, you can see our estimated tax refund calendar
to know when you're gonna expect your tax refund.
We'll put that link in the description below.
Let's talk about
the advanced child tax credit reconciliation.
Last year to get more cash to families
in need, the IRS started sending out
child tax credit payments monthly to qualifying families.
As a result, at least 35 million families
across the United States started receiving this cash.
But you need to remember this extra payment
was actually an advance on your 2022 child tax credit.
As a result, you'll need to reconcile any payments
and you could either owe a refund to the IRS
or be entitled to more money.
In January of 2022,
the IRS will have sent you a letter 6419
to provide the total amount
of your advanced child tax credit payments
that were dispersed to you during 2021.
You need to keep this letter regarding
your advanced child tax credit payments
with your tax records and you may need use this letter
when you file your 2021 tax return
during the 2022 tax filing season.
However, if you're an early filer,
you may not want to wait for this letter,
or it could be incorrect anyway.
As a result, we believe that many early filers
could see their tax return stuck in limbo
at the IRS due to this new child tax credit.
Let's discuss IRS staffing.
The staffing of the IRS is likely gonna cause
a lot of delays for early tax filers.
The reason is simple.
With many IRS workers stuck at home or sick
due to the pandemic, there will be delays.
Combine that with the fact that the IRS
is still behind in processing mail and tax returns
from 2021, we expect some delays. (chuckles)
The IRS opened e-file on January 24th, 2022.
In their announcement, the IRS even noted
huge staffing shortages
and the potential for delays.
If you're mailing documents to the IRS,
expect even more delays.
It could take months and months to clear
through the backlog last year.
And the IRS is still delayed on taking care of mail returns
and other correspondence.
Furthermore, if you have any issues with your return,
such as requests for information or updates,
you'll be stuck waiting as well.
Staffing around the pandemic is really gonna delay anything
that requires an actual human to work on.
Then there's the issue of crooks stealing your refund.
If you're a crook, you try to file as many tax returns
as possible, as quickly as possible.
The IRS processes everything on
a first-come first-serve basis.
So if a criminal files a tax return in your name
before you do, and they steal your refund,
they win the race.
For the government, they will end up paying you
your proper refund, but they'll also lost out on the money
that they sent to the criminals.
The bottom line is that they're delaying your tax refund
because they don't wanna lose more money.
The IRS estimates it paid out 1.3 billion dollars
in fraudulent tax returns last year.
If you're a victim of identity theft,
you're gonna have to submit a bunch of documents to the IRS
to get the identity theft issue resolved.
This can take anywhere from several weeks to several months.
It's a long process,
and it's not always easy.
In an effort to combat this,
the IRS is now gonna hold some refunds
until February 15th, 2022.
The goal here is to see if two tax returns are filed
for the same individual.
It's important to note that not all tax returns
are being delayed because of this new law.
Only tax returns that have
the following tax credits are being held,
the earned income tax credit
and the additional child tax credit.
These are likely the most common tax credits
taken by criminals since they
are what's known as refundable tax credits.
That means even if you owe no taxes because of the low
or moderate income you have,
you could still receive a refund for these tax credits.
If you're a criminal looking to get the most money possible,
you'll likely wanna file a return
with these tax credits on it.
That's not advice by the way. (chuckles)
However, the impact is that low
and moderate income tax filers have
to wait longer for their tax refunds
than in previous years.
Now you might be asking, well,
how long do I have to wait for my refund?
Well, the answer is it all depends.
The IRS is still estimating that 90% of people
should receive their refunds within 21 days.
If you file early, the IRS will hold your refund
until February 15th and then begin processing your refund.
So to help everybody along,
we wanna encourage you to comment below to share your story
so that others can see the timing as it happens.
If you wanna get started early on your taxes,
check out our video for our top picks
for tax software this year.
In the end, these delays are not really something
you can control.
As with most things, though,
if you prepare and get in early, things may be a bit easier.
As I mentioned earlier, please comment below
about your tax return situation this year.
Did you find your tax refund delayed
because of this new law?
How quickly did you receive your tax refund
or did you have any issues with fraud? (grunts)
Please let us know in the comments below.
Thanks for hanging out today.
This is Andy from The College Investor.
We'll see you in the next video.