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Tax

5 best practices for tax pros in 2022

By Mark Friedlich
March 25, 2022 11:12 AM

We’re now more than halfway through the 2022 tax return filing season, and I’m often asked for filing best practices — more specifically, best practices for filing income tax returns and dealing with the IRS and state and local taxing authorities.

The pandemic has created unique challenges for tax professionals, taxpayers and the taxing authorities. The IRS has provided some relief in several ways, including halting certain notices to taxpayers and, in many cases, eliminating the need to file those lengthy new K-2 and K-3 forms. See my article on the recent IRS guidance regarding K-2 and K-3 filing relief, especially if you are working with domestic S corporations and partnerships and don't have knowledge of partner or shareholder need for information on items of international relevance.

The IRS recently granted further penalty relief in Notice 2022-13 for qualifying farmers and fishers filing Forms 7203, as long as they:

  1. Electronically file their 2021 tax return, and,
  2. Pay any tax due by April 18, 2022 (or April 19 for those living in Maine or Massachusetts).

However, with millions of prior years’ returns still not processed, continued staffing and technology challenges and continued complaints by tax professionals about the difficulty of reaching IRS staff by phone, we can expect a particularly challenging tax season, even as the IRS reassigns hundreds of experienced staff and brings on thousands of new employees in an effort to improve service for both tax professionals and taxpayers. Commissioner Chuck Rettig recently indicated that the goal of the IRS is to clear the returns processing backlog by the end of 2022.

Despite these ongoing challenges, your tax practice’s busy season doesn’t need to be a disaster. Below are five best practices that can help filing returns go more smoothly and expedite receiving refunds.

While these recommendations will certainly help expedite filings and processing of returns and receipt of refunds, significant backlogs, lack of adequate staffing, difficulty reaching tax authority agents by phone and pandemic-related IRS and state and local office closures will undoubtedly make this tax season a unique and particularly challenging one for tax professionals and taxpayers.

Use e-File and choose direct deposit

1040 forms
While this may seem like a no-brainer, especially with the current backlog of paper returns, you'd be surprised at how many people still default to paper returns. Whenever possible, leverage e-file.

File an accurate return — even if it means waiting

Make sure you collect all necessary documents before preparing a return. This year, in particular, it’s crucial to ensure you have the most accurate information and documents. In addition to collecting W-2s, Form 1099s and other income-related statements, make sure you have the advance Child Tax Credit and Economic Impact Payment letters when filing.

Advance CTC Letter 6419: In late December 2021, and continuing into January, the IRS sent letters to taxpayers who received advance CTC payments. The letter says, “2021 Total Advance Child Tax Credit Payments” near the top and “Letter 6419” on the bottom right-hand side of the page. Here’s what you need to know:
  • The letter contains important information that can help ensure the tax return is accurate.
  • For eligible taxpayers who received advance Child Tax Credit payments to receive the second half of the credit, a 2021 federal income tax return must be filed.
  • For eligible taxpayers who did not receive advance Child Tax Credit payments to receive the full credit, a 2021 federal income tax return must be filed.
Third Economic Impact Payment Letter 6475: In late January, the IRS began issuing letters to people who received a third payment in 2021. The letter says, “Your Third Economic Impact Payment” near the top and “Letter 6475"”on the bottom right-hand side of the page. Here's what people need to know:
  • Most eligible people already received their stimulus payments.
  • This letter will help determine if taxpayers are eligible to claim the Recovery Rebate Credit for missing stimulus payments.
  • Those eligible for the RRC must file a 2021 federal income tax return to claim their remaining stimulus amount.
These letters — 6419 and 6475 — include important information that will help ensure accurate 2021 tax return filings. 

Remember that if a return includes errors or is incomplete, it is likely to require further review by the IRS to correct the error and slow the timing of receipt of a tax refund.

Use IRS online resources rather than calling

Phone demand on IRS assistance lines remains at record highs. To avoid lengthy delays, the IRS urges people to use IRS.gov to get answers to tax questions, check the refund status or pay taxes.

Additionally, the IRS has several ways for taxpayers to stay up to date on important tax information:
Taxpayers can also get information in their preferred language. The IRS translates tax resources into several languages and currently has basic tax information in 20 languages. People can also file Schedule LEP, Request for Change in Language Preference, to receive written communications from the IRS in their preferred language.

How to file a 2021 return while waiting for 2020's to be processed

To validate and successfully submit an electronically filed tax return to the IRS, taxpayers need their adjusted gross income, or AGI, from their most recent tax return. The IRS has a couple of “special tips” to ensure the tax return is accepted by the IRS for processing.

For those waiting on their 2020 tax return to be processed, enter $0 (zero dollars) for last year’s AGI on the 2021 tax return.

For those who used a non-filer tool in 2021 to register for an advance Child Tax Credit or third Economic Impact Payment in 2021, enter $1 (one dollar) as the prior-year AGI.

All others should enter the prior year’s AGI from last year’s return. Tax preparation software that was used last year will auto-populate this field.

Use free IRS resources

To avoid delays with filing a paper tax return and to enhance accuracy, filing speed and refund receipt, the IRS recommends using tax software as a best practice. There are various options available for taxpayers in need of free help, including many resources on IRS.gov.

One option for taxpayers in need is IRS Free File, which is available to any person or family who earned $73,000 or less in 2021.

Qualified taxpayers can also find free one-on-one tax preparation help around the nation through the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.
Mark Friedlich
Vice president, U.S. government affairs, Wolters Kluwer Tax & Accounting North America
Tax Tax season IRS Income taxes Tax practice
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