What can I do to get my money faster?
Since manual paper returns face the longest delays — and to an extent, are at the root of the backlog — pick a reliable tax software and file your return online.
Unfortunately, the only thing you can do to get your refund sooner is to make sure your return is complete and contains no errors before you hit “submit”.
And you can start checking the IRS’s tracking tool, Get My Refund, 24 hours after uploading your forms (or 4 weeks after you mail your return) to get the current status of your refund.
How do I make the best of the new deadline?
Now that you have extra time to file your return, here are some ways you can boost your refund:
The Recovery Rebate Credit. Did the IRS shortchange you on your stimulus checks in 2020? This is your opportunity to claw back some of that cash.
Mortgage debt forgiveness. Normally when debt is forgiven, it’s taxable as a form of income, known as cancellation of debt (COD) income. New laws give homeowners a break on this tax for their principal residence until 2025. (Though be aware, the amount treated as tax-free for those years has been reduced to $750,000.)
Medical expenses. In years past, your medical expenses had to be more than 10% of your adjusted gross income to be deductible. But beginning this tax season, that percentage is down to 7.5%, meaning more expenses are deductible.
Child Tax Credit. The Child Tax Credit is intended to help working families by letting them claim as much as $2,000 per child under the age of 17. If you have not yet filed your 2020 tax return, your 2019 income will be used to determine eligibility.
The Earned Income Tax Credit. This credit for lower-income households helps lower your amount of taxable income. The EITC can increase a family’s refund by more than $2,000 on average, but here’s the thing: you have to proactively add the credit to your return.
How did this extension come about and why?
The beginning of tax season was delayed this year by three weeks because the IRS was busy at the time processing the $600 second stimulus checks.
Until recently, the IRS was adamant about sticking to the April 15 deadline. The only exception was granted to residents of Texas, Oklahoma and Louisiana who were impacted by a destructive winter storm — they’ve been given until June 15 to file.
But tax professionals and politicians began pushing for an extension when tax season opened.
The National Association of Tax Professionals wrote the IRS commissioner an open letter in February and cited a poll of tax professionals indicating that 71% of them would support an extension.
And Democrats on the Ways and Means committee wrote to the IRS commissioner around the same time, asking him to give everyone an extension to July 15 as it did last year.
“Facing enormous strain and anxiety, taxpayers need flexibility now. We demand that the IRS announce an extension as soon as possible,” Reps. Richard Neal and Bill Pascrell, Jr. wrote in the February statement.
IRS Commissioner Charles Rettig is set to testify in front of the House Ways and Means Committee Thursday, where he will likely have to answer some tough questions about the backlog and the impact it’s having on American taxpayers.
What if I need money right now?
If you’re one of those households struggling financially and can’t wait for the IRS to sort through millions of returns, you have a few options to make room in your budget immediately.
Slash your insurance bills. Car insurance companies have been handing out discounts to drivers sticking close to home through the pandemic. Not yours? Sounds like it’s time to shop around for a better deal. And while you’re looking, you could also save hundreds on homeowners insurance by comparing rates to find a lower price.
Cut the cost of your debt. Sure credit is convenient, but expensive interest always catches up with you. Make your debt easier to carry — and unload sooner — by folding your balances into a single debt consolidation loan at a lower interest rate.
Trim your budget to free up more cash. By finding a few creative ways to cut back, you can possibly rearrange your budget to give yourself your own “tax refund”. Cut back on takeout and have fun in the kitchen together making your own pizza for date night. Have a hobby or special talent? Turn it into a side hustle to bring in extra income. And, download a free browser extension that will automatically scour for better prices and coupons whenever you shop online.