Tax Filing Season Is Here. Here Are Some Tips for Avoiding Snags

The Internal Revenue Service has made big strides over recent years to improve service, but rough spots remain as the agency starts processing 2024 returns on Sunday.

Taxpayers who rely on digital channels to get questions answered, file returns and receive refunds have the best chance of a painless process with refunds arriving within a few of weeks.

But going digital isn’t a hassle-free guarantee. Some 12%, or 18 million, of e-filed returns and their refunds were held up last tax season because the IRS suspected fraud, usually erroneously, and just 20% of impacted taxpayers were able to reach an IRS agent to try to resolve the issue, according to the Taxpayer Advocate Service (TAS).

Some e-filers are expected to face similar frustrations this year, and taxpayers who still file paper returns or who have more complex situations are much more likely to encounter hassles.

“I had a call with the IRS today to ask about a client who submitted an amended return in November of 2023 for the 2021 tax year and they still haven’t received a refund,” says Sean McKay, partner at the accounting firm UHY. “In that case the refund is about $50,000. I have another client waiting over a year and that refund is for $80,000.”

Victims of fraud such as identity theft, which has been a growing problem in recent years, have experienced worsening wait times and will likely continue to face frustrations this year.

Last year, the average wait time to resolve cases of identity theft increased to 22 months from 19 months in 2023, according to TAS.

The good news for taxpayers is that little has changed in the tax law for 2024 returns, which can help minimize challenges.

To best avoid nettlesome issues as you bear down on this tax season’s April 15 deadline, file electronically, request your refund as a direct deposit and consider using the IRS’s much-improved digital tools to get organized and find answers to questions.

Read the full article published by Barron's.