The Internal Revenue Service will kick off the 2022 tax season this month, although it's already warning taxpayers to brace for delays as the agency wrestles with a massive pileup of unprocessed returns accrued during the pandemic.
In a report to Congress this week, the National Taxpayer Advocate estimated the IRS had a backlog of more than 8.6 million unprocessed individual income tax returns and 2.8 million business returns as of mid-December due to the pandemic and other related disruptions. It also had close to 5 million pieces of unanswered mail.
By comparison, the IRS usually enters the tax-filing season with fewer than 1 million remaining items to address.
There are several reasons for the delays. The IRS was grappling with office closures as well as the Herculean task of delivering millions of stimulus checks in 2020 and 2021, all while trying to adapt to major changes to the tax code in the middle of the filing season. The agency is also grossly understaffed; it has 20,000 fewer staff than it did in 2010, and its budget is roughly $11.4 billion – 20% less than it was in 2010, when adjusted for inflation, according to the Congressional Budget Office.
On top of that, more than 20% of the IRS customer service workforce has been unable to work for pandemic-related health reasons over the last two years.
A man enters the Internal Revenue Service (IRS) building in Washington, D.C., U.S., on Friday, May 7, 2010. (Andrew Harrer/Bloomberg / Getty Images)
Here are the key dates taxpayers need to know in order to prepare for this tax season:
The IRS Free File program opened on Jan. 14 to taxpayers who made $73,000 or less in 2021. Individuals can use the program to file their taxes electronically for free using software provided by commercial tax filing companies.
About 70% of people filing taxes in the U.S. – or about 100 million Americans – qualify for the free program offered by the IRS, which is a public-private partnership between the IRS and the Free File Alliance, a group of tax preparation companies with online software. That now includes groups like TaxAct and FreeTaxUSA after TurboTax, as well as H&R Block, exited the program.
Taxes are due on Jan. 18 for fourth-quarter estimated payments, which are used to pay levies in quarterly installments on income that is not subject to withholding, such as earnings from self-employment, alimony, dividends and capital gains.
The IRS said Monday that it will begin accepting 2021 individual income tax returns on Jan. 24.
Treasury Department officials urged taxpayers to file their tax returns as soon as possible, noting that individuals do not need previous returns in order to submit their 2021 returns. Americans are encouraged to file electronically with direct deposit in order to avoid potential delays and receive their return within 21 days.
Qualified employees must fill out a tax exemption Form W-4 and give it to their employers by Feb. 15 if eligible.
The tax-filing season will end on April 18 this year for most individuals, rather than the usual deadline of April 15, because that's when Emancipation Day will be observed in Washington, D.C.
Taxpayers can request an extension online by filling out Form 4868 using the IRS’ "Free File" tool. You need to submit the form by April 18, or print the form and mail it to the IRS address for your state, making sure it's postmarked by April 18.
It can give filers more time to thoroughly review their return and take advantage of all the tax benefits, like various deductions and credits, that are available to them to help them reduce their liability.
Charles P. Rettig, commissioner of the Internal Revenue Service, testifies during a Senate Finance Committee hearing on the IRS budget request on Capitol Hill in Washington, June 8, 2021. (TOM WILLIAMS/POOL/AFP via Getty Images / Getty Images)
By pushing back the filing date, you can also avoid a failure-to-file penalty – an extra 5% per month on the unpaid amount, which can add up to 25% of the tax due. If you file for an extension, you have until Oct. 15 before the penalty starts accruing.
Experts caution that filing for an extension does not mean you can delay paying the government the taxes that are owed.
The first estimated tax payment for 2022 is also due on April 18.
The second estimated tax payment for 2022 is due.
The third estimated tax payment for 2022 is due.
Americans who received tax deadline extensions must file their returns by Oct. 17.