Pandemic-related IRS Changes could Delay American Tax Refunds at a Time when Consumers Need Them Most
American Consumer Credit Counseling offers refund advice for Americans who may need their tax refund to get through the next month or two
The COVID-19 pandemic has triggered drastic changes within the IRS that could cause significant delays with American’s tax refunds – especially for those who file paper tax returns, national nonprofit American Consumer Credit Counseling warned today.
These changes could pose additional challenges for Americans who need their tax refund to cover the cost of rent, food, and other everyday expenses as a result of the coronavirus pandemic.
The IRS has implemented a delayed tax deadline of July 15 due to the pandemic. It’s also closed its processing centers, which has slowed the agency’s ability to process paper tax returns – causing significant delays for some taxpayers and businesses. The IRS is continuing to process returns received electronically, as well as deposit refunds and electronic payments. According to the IRS, it has received more than 97.4 million tax returns and issued over $213 billion refunds as of April 3 – down from $221 billion last year during this time.
“The pandemic has upended life for millions of Americans, creating a variety of new financial challenges unimaginable even a few months ago,” said Steve Trumble, President and CEO of American Consumer Credit Counseling. “For many Americans, their refund is crucial to help them survive the next month or two. Other consumers who are desperate to save as much as possible may choose to deposit their refund in a rainy-day fund.”
A majority of Americans – close to 80 percent – have been impacted in some way financially by the COVID-19 pandemic, according to a recent poll by ACCC.
The ACCC Financial Health Index – a poll of 430 Americans aged 25-65 with incomes of $100,000 or less – found that 29 percent have been “significantly impacted” financially by COVID-19, while close to 50 percent have been at least “somewhat impacted.”
American Consumer Credit Counseling suggests that consumers file their taxes before the July 15 deadline to ensure they receive their refund as soon as possible. Those who have already or will soon receive their tax return should consider utilizing it to either create or contribute to their emergency fund. This type of fund should ideally cover up to six months’ worth of expenses in the event of a crisis, such as job loss or the current pandemic.
The IRS allows taxpayers to split their refund into three different accounts. For taxpayers that haven’t filed their 2019 taxes yet, they may want to consider splitting their federal income tax refund into different accounts. If taxpayers wish to split their return, consider putting some in a checking account for immediate needs, a portion in a savings account for an emergency fund and a portion towards investment or retirement funds.
Most consumers list “paying off debt” in their top three of their financial goals. Consumers may want to consider using a portion of their tax refunds to pay off their high-interest debt, such as credit card debt.
About American Consumer Credit Counseling
American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling 501(c)(3) organization dedicated to empowering consumers to achieve financial management through credit counseling, debt management, bankruptcy counseling, housing counseling, student loan counseling, and financial education concerning debt solutions. To help consumers reach their goal of debt relief, ACCC provides a range of free consumer personal finance resources on a variety of topics including budgeting, credit and debt management, student loan assistance, youth and money, homeownership, identity theft, senior living, and retirement. Consumers can use ACCC’s worksheets, videos, calculators, and blog articles to make the best possible decisions regarding their financial future. ACCC holds an A+ rating with the Better Business Bureau and is a member of the National Foundation for Credit Counseling® (NFCC®). For more information or to access free financial education resources, log on to ConsumerCredit.com or visit http://www.consumercredit.com/financial-education.aspx