Stimulus checks, unemployment benefits making tax season messy

IRS falls behind processing tax returns
Published: Mar. 15, 2021 at 11:13 PM EDT
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TOLEDO, Ohio (WTVG) - The IRS has a growing backlog of tax returns as it works to process stimulus payments for millions of Americans.

The IRS still hasn’t processed about seven million tax returns filed this year, which is more than three times the figure at this point during last season. The IRS also didn’t begin accepting returns until mid-February.

“The treasury has been overwhelmed,” said Dave Gang, the owner of Liberty Tax on Laskey Road in Toledo. “Obviously, there was good planning and execution on getting the stimulus out, but I think that was probably at the expense of processing returns.”

Texas taxpayers affected by February’s storm learned their tax deadline is moved to June 15, but The IRS hasn’t announced a change to the 2021 nationwide filing deadline like it did in 2020. Last year, the pandemic forced the deadline to move to July 15.

“We are really really swamped right now,” Gang said. “We have a lot to catch up on. It would be nice to have a little more time to complete those returns.”

He said stimulus checks and unemployment claims have complicated and slowed the process for tax filers across the country this year.

The American Rescue Plan Act signed into law by President Joe Biden last week included the third round of stimulus payments for millions of Americans, the expanded child tax credit and other provisions. One of them includes making the first $10,200 of unemployment benefits nontaxable.

In response to the passage of the coronavirus relief package, the IRS said more information about all of the changes will come out soon.

“The IRS strongly urges taxpayers to not file amended returns related to the new legislative provisions or take other unnecessary steps at this time,” the IRS said in a statement. “The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable.”

Gang says with the backups already out there across the country, he thinks the IRS will ultimately grant an extension nationwide.

“You have to take your time,” Gang said. “There are so many changes we have to get right. That’s really critical. I don’t think there are enough hours in the day to get through the backlog.”

The $1,400 stimulus checks started hitting bank accounts over the weekend, but they’re not all coming out at once. Click here to visit the IRS website to check on the status of your payment.

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