Best Practices For Tax Professionals Filing Tax Returns in 2022

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We're now three weeks into 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.

As we know, 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 essentially eliminating the need for filing the 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.

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.

Despite these ongoing challenges, your tax practice's busy season doesn't need to be a disaster. Several best practices can help you, the tax professional, and your clients during the busy season.

Here are five that can help filing returns go more smoothly and expedite receiving refunds.

1. Use e-File and choose direct deposit.

While this may seem to be 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.

2. 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 that 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 (AdvCTC) 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 righthand 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 (RRC) for missing stimulus payments
• Those eligible for 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. This will slow the timing of receipt of a tax refund.

3. Use IRS online resources, rather than calling, if possible.

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 a refund status or pay taxes.

Additionally, the IRS has several ways for taxpayers to stay up to date on important tax information:

• Follow the IRS' official social media accounts and email subscription lists to stay current on the latest tax topics and alerts
• Download the IRS2Go mobile app, watch IRS YouTube videos, or follow the IRS on Twitter, Facebook, LinkedIn and Instagram for the latest updates on tax changes, scam alerts, initiatives, products and services

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.

4. Follow this tip to successfully e-file a 2021 tax return while waiting for a 2020 tax return to be processed

In order 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 tip" 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 used last year will auto-populate this field.

5. Use free resources provided by the IRS.

During this challenging year, the IRS suggests using the various options available to get free help, including many resources on IRS.gov. To avoid the delays with filing a paper tax return, and enhance accuracy and speed to file, the use of tax software is best practice. For those taxpayers in need, IRS Free File is an option. IRS Free File 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 (VITA) and Tax Counseling for the Elderly (TCE) programs.

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