The relief package Congress adopted to ease the economic strain of the COVID-19 pandemic last year advanced child tax credits and offered a host of stimulus payments and loans for individuals. The measures helped boost the economic recovery last year, but they may complicate the filing of 2021 tax returns this year.
Unlike the past two years, when COVID-19 pushed back the traditional April 15 filing deadline, the Internal Revenue Service has returned to its traditional mid-April deadline this spring for tax returns to be filed. But even with a more normal tax season again this year, tax breaks granted in the American Rescue Plan last year continue to cause extra work for the IRS and many taxpayers.
The advanced payments of the child tax credit received during 2021 must be reflected on tax returns, and people who were eligible for March’s $1,400 economic stimulus payment but didn’t receive it can claim it on their returns.
In December, the IRS said it was still working through a backlog of claims for the credits and other paperwork, which may cause complications when filing this year’s tax return.
“Tax preparers may face their most grueling tax season to date,” says Samantha Strong of the National of Association of Tax Preparers.