After preparing your tax return and discovering you’ll get a refund, you might start planning how to spend or save it. Not so fast! Mistakes on your 1040 can keep you waiting for that refund.
“When your return is right to start with, the chances that you’ll get your refund quickly go way up. Likewise, the chances that you’ll get a letter from the IRS go way down — and that’s always good news,” says IRS spokesperson Eric Smith.
We talked to experts about common missteps that can slow the processing of your tax return and getting your refund. Avoid these six errors to get your refund faster.
1. Filing a paper return
The IRS is stressing the importance of filing online, not by mail, to receive a timely refund. Most taxpayers who file a tax return with no issues should receive a refund within 21 days if they e-file and choose direct deposit, according to the IRS. But filing a paper return will result in an “extended refund delay” because of enormous challenges related to the pandemic, the IRS says.
The agency recommends taxpayers use software, a trusted tax professional or IRS Free File on IRS.gov. “Even in a more normal year, electronic filing is always a good idea,” says Smith. “Now, with the pandemic, it’s a great idea, and it’s your best chance of getting a quick refund.”
Just over 90 percent of people file electronically. Others complete their return with pen and paper and mail it. Still others prepare their return with software, then print it out to send to the IRS. For tax year 2019, more than 40 percent of taxpayers who filed a paper return used software before printing it, according to the IRS. “Don’t hit print, hit send,” Smith advises, noting the savings in paper, postage and time.
You also want to get your refund by direct deposit. “The IRS prefers to directly deposit refunds rather than mail a paper check because it’s more secure, it’s faster and I think it’s less costly for them,” says Pamela Rodriguez Reiffert, a CPA in San Antonio.
2. Forgetting to sign your return
“Sending in an unsigned paper return is like sending in no return at all. At that point, it’s not valid,” says Smith. “We have to send it back to you for your signature. Then you have to send it back to us. So, unfortunately, it then becomes part of our paper backlog.”
Tax software, however, has built-in prompts that won’t let you e-file without an electronic signature, which is another reason to file electronically. “It’s pretty much foolproof,” says Raven Deerwater, an enrolled agent in Mendocino, Calif. Enrolled agents prepare tax returns and also represent taxpayers before the IRS.
If you omit something important while filing electronically, your return will be rejected by the IRS, but it can usually be fixed faster. “Nobody likes to get rejected, but in this case, rejection helps you by allowing you to quickly make a correction. When something like that happens with a paper return, it can take weeks, or even months, to resolve,” says Smith.
3. Incorrectly reporting the Child Tax Credit and stimulus payments
If you received a third stimulus Economic Impact Payment or the advance Child Tax Credit, make sure you enter the correct amounts on your tax return. “Incorrect entries when reporting these payments mean the IRS will need to further review the tax return, creating an extensive delay,” the IRS says in a release.
The IRS is mailing special letters about amounts received for the stimulus payments and advance Child Tax Credit payments. You can also check your payments in your online account at IRS.gov.
Stimulus payments can be extra challenging because the funds may have come via direct deposit, check or gift card, and it’s possible you didn’t receive yours, says Deerwater. Some people threw away gift cards, mistaking them for junk mail.
“It may be a mistake the IRS made, and it may be a mistake you made, or there may be no mistake and you just have to be patient and go through the reconciliation process if it doesn’t match,” Deerwater says.
If you received the Child Tax Credit in 2021, you will need to fill out Schedule 8812, “Credits for Qualifying Children and Other Dependents,” and attach it to your return. This is required whether you are claiming the credit, repaying advance payments because you didn’t qualify for the credit, or claiming full or partial protection from the repayment requirement based on your family’s income. “This is different from past years,” says Smith. “Although this schedule has been around for years, not everyone has had to fill it out in the past. Omitting Schedule 8812 will delay your refund.”
Married couples should know that each spouse will receive a Letter 6419 showing their portion of any advance Child Tax Credit payments they received during 2021. If the spouses are filing jointly, they need to add those two figures together and report them on Schedule 8812. Failing to do so can delay your refund.
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4. Not waiting for all your 1099s or W-2s to arrive
Maybe you’ve already filed your return, and then you receive a 1099 for an account you forgot about. Or perhaps you hold multiple jobs, and a W-2 arrives after you’ve submitted your return. The problem is that the IRS has already received all your 1099s and W-2s. So if you don’t include income from all your 1099s and W-2s on your return, your income will be lower than what the IRS has on file.
That will trigger an IRS CP2000 Notice, a letter telling you the income you reported on your return does not match what the IRS has on file. The notice will propose changes to your return, based on the agency’s files, and ask you to pay additional taxes or the agency will lower your refund. You will have to complete and sign a response form saying that you either agree with the IRS’ changes or you disagree, in which case you’ll need to provide documentation to support your case.
Another potential headache is you have all your 1099s and W-2s, but one of them is incorrect. You should carefully check your 1099s, W-2s and other year-end statements as they arrive to ensure there are no errors. “Overall, employers, banks and other payers do a great job getting these out quickly and accurately, but, like the rest of us, they’re human and sometimes make mistakes. If a statement is wrong, contact them right away and get a corrected copy,” Smith says.
5. Claiming dependents incorrectly
If you are claiming your children as dependents, make sure they are not claiming themselves on any return they file. “If that happens, that can delay your refund,” says Rodriguez Reiffert. Then the parent or child will need to correct the mistake, she says. Divorced couples must make sure only one parent is claiming any children as dependents, notes Deerwater.
Also, be sure to enter the correct Social Security number for each dependent. “If you’re paper-filing, it won’t automatically get kicked back,” Rodriguez Reiffert says. “If you e-file, you probably won’t be able to e-file your tax return if you make an error on the Social Security number or if you transpose numbers.”
Accuracy with dependents is especially important this tax season. “This year, more than ever, because there are so many family-oriented benefits available, you want to be able to claim them properly,” says Smith.
6. Sending your return to the wrong IRS processing center
The IRS will need to forward your return to the correct processing center, delaying when the agency’s staff can begin working on your filing. “You get in the back of the line at that place,” says Deerwater. “The waits are already longer than normal, and now you’re doubling the wait because you’ve made the mistake.”
Sharon Waters, a former CPA, has written for Wired.com and other publications.