Stimulus Check Update: $1,400 Payments May Affect Tax Returns, Here’s Why
Many Americans are eagerly awaiting their third stimulus checks after President Biden signed his enormous $1.9 Trillion American Rescue Plan into law, but while $1,400 direct payments could arrive in many bank accounts as soon as this weekend, the relief payments could stall other money that Americans might be expecting from their federal income tax returns.
With the IRS processing not only tax returns but also the stimulus payments, the newest round could cause a further backlog when it comes to processing tax returns that have been filed, WDAF, a FOX affiliate station reports.
Kelly Nagel, an accountant with Innovative Tax & Accounting Solutions, warned the news station that Americans would need to be patient with receiving their tax refunds, because the system is already backed up because of COVID-19, and the new bill, which not only provides stimulus payments but also allows for unemployment benefits to remain untaxed, could clog things further with filed amendments as well.
“Be patient. Be patient with us because it’s changing, and it’s going to change more,” she said.
An additional part of the delay comes from the IRS still processing 7 million returns which were submitted in 2020 for 2019, with returns arriving later than usual because the deadline was extended from April to July because of the pandemic.
“There’s been such a delay, and a lot of it was they were completely shut down and even now, a lot of them are working remotely. They’re not at full capacity,” Nagel said.
The delays because of the pandemic have led to some still awaiting not only 2020 returns that are being filed this year but also their 2019 returns that they filed in 2020—and in some cases, even the first and second stimulus payments. The Washington Post reported in January that of 16 million paper individual tax returns received by the IRS in 2020, 6.9 million were still in the “processing pipeline” as of Dec. 25, a total of 40%.
At the time, the IRS said that returns and correspondence was all being rerouted to locations where more staffing was available and asked for people to be patient.
“For refunds that could not be issued in 2020 because the tax return is being corrected, reviewed or awaiting correspondence from a taxpayer, the refund will be issued as a paper check in 2021 per our normal processes,” the IRS said. “Taxpayers are encouraged to continue to check ‘Where’s My Refund’ for their personalized refund status.”
Despite the delays and other possible ones from the incoming checks, the IRS did say that those who have filed taxes by now should all get refunds by March 22.
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