This tax season could be tricky for Indiana taxpayers

INDIANAPOLIS — Buckle up. This tax season could be a bumpy ride for some.

The Internal Revenue Service is already facing understaffing and a backlog of paper returns from the start of the pandemic — add in advanced child tax credits and stimulus payments, and it could be a confusing mess for some taxpayers.

Many people rely on software like TurboTax and H&R Block to do their taxes in-person or online, but both companies have announced they are opting out of IRS Free File.

IRS Free File is a public-private program that lets you prepare and file your federal income tax online using guided tax preparation or you can file at an IRS partner site.

Tax season does not officially begin until Jan. 24, but Sarah Wilson of Grant County already completed her taxes online.

“We got our W2s early at work and I went ahead and put the numbers in,” said Wilson. “I'm ready to hit that button the 24th when they allow us to do it."

Wilson did her taxes early because she’s concerned about problems at the IRS uncovered by WRTV Investigates like a backlog of 2.7 million unprocessed amended returns, understaffing, and problems with customer service.

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A new taxpayer advocate report says, “IRS phone service has gone from bad to worse during COVID-19, with calls reaching an all-time high and level of service falling to an all-time low."

“That does concern me,” Wilson said. “The reason I did it so early is I’m hearing that because of COVID and staffing issues, the IRS is still behind.”

Sarah Wilson paid around $12 to do her taxes.

The Internal Revenue Services says most taxpayers do not have to pay to file their federal taxes.

If your adjusted gross income was $73,000 or less, you can use the IRS Free File program which launched Jan. 14.

Seventy percent of Americans qualify for IRS Free File, but many don’t use it, according to Luis Garcia, an IRS spokesperson.

"Go to IRS.gov and use our free tax filing software,” Garcia said. “You don't have to pay for it. You can get it for free."

You can also get help with filing your taxes face-to-face through IRS Volunteer Income Tax Assistance (VITA) centers throughout Indiana.

"Just call 211 and they will find someone right around the corner, maybe in a church basement," Garcia said.

VITA Centers and the IRS Free File website are expected to be extra busy this year, especially with TurboTax and H&R Block opting out of IRS Free File.

Low-income taxpayer clinics like the ones offered by Indiana Legal Services and the Neighborhood Christian Legal Clinic can help resolve tax issues, but they can’t file your current year’s taxes.

“I think it's going to be a very big tax season,” said Shawn Richter, director of Tax and Economic Justice at the Neighborhood Christian Legal Clinic. “It's going to be hectic and busy. There's going to be a lot of issues."

The clinic can help resolve issues with the IRS like missing stimulus payments and tax debts.

Richter says the biggest tax mistake people make is burying their head in the sand when they get a letter from the IRS.

“If they would have just kept their documentation, if they would have kept their notices and not ignored and paid attention to the dates instead of waiting months after those dates, things could have happened much more quickly,” Richter said.

Keep an eye on your mailbox.

The IRS should be sending you a letter about how much you should have received for your advanced child tax credits.

You will need that information when filing your taxes this year.

If there’s a discrepancy, that could delay the processing of your tax return, according to Indiana Legal Services’ staff attorney Leslie Parrish.

If you receive a letter from the IRS and it does not match the amount you received, here’s what you can do.

“File a tax return using the amounts given on their letter and then later on they can file an amended return where they can ask for the amount they believe is correct, said Leslie Parrish, a staff attorney with the low income taxpayer clinic at Indiana Legal Services. “That's another thing we are also advising taxpayers to think about doing. If you do find yourself in the situation we are here to answer people's questions and to assist in knowing what to do."

Wilson, the taxpayer who already completed her returns online, said you will also need to know when you got your stimulus checks, or Economic Impact Payments, and how much you received.

“If you know that ahead of time, most of them were auto deposited, so you can just look at your account and have those in hand,” Wilson said.

She hopes to get her refund smoothly this year so she doesn’t have to ask for help.

“It's hard to get a hold of the IRS,” Wilson. said “You can't get a hold of anyone."

The IRS says the best thing you can do is to e-file your taxes and ask for direct deposit.

“The vast majority of taxpayers are going to get their refund in 21 days or less,” Garcia of the IRS said. “If you do a paper tax return and mail that in and then you ask for a check, it’s going to take a lot longer than 6-8 weeks which It used to.”

Also, the IRS warns to make sure you’re actually using the IRS Free File program.

Many people use a search engine and inadvertently end up on a website that makes you pay money to file your taxes.

When filing your state tax return in Indiana, INfreefile offers free filing for taxpayers with lower incomes.

TurboTax points out it offers its $0 Any Way program which will allow 60 million with simple federal and state taxes to file for free.

“Only TurboTax gives taxpayers with a simple return the choice to do their taxes themselves, get help from a tax expert along the way, or hand it off to a dedicated tax expert to do their taxes for them, for $0,” the company said in a statement to WRTV. “TurboTax will be offering those filing simple tax returns for its TurboTax Live Basic and TurboTax Live Full Service Basic products for free, in addition to its TurboTax Free Edition product, which is America’s most widely used product for filing taxes free of charge. $0 for federal returns. $0 for state returns. $0 any way taxpayers want to file.”

The company also points out over the last eight years, nearly 100 million customers filed for free with TurboTax.

“Over 17M Americans filed 100% free with TurboTax last year,” the company said in a statement to WRTV. “More have filed free of charge with TurboTax than all other online tax prep providers combined.”

H&R Block emphasizes taxpayers have other options to file for free.

“H&R Block no longer participates in the IRS Free File program,” the company said in a statement to WRTV. “However, there are many ways H&R Block is helping Americans file their taxes this year, including free online filing. More information can be found here.”

The VITA locator tool is not currently working, so WRTV obtained a list of VITA centers from the IRS:

The Indiana Department of Revenue lists the following resources for seniors and low-income taxpayers in Indiana.

• The AARP Foundation Tax-Aide program focuses on helping low- and moderate-income people, with special attention to those over age 60.
• The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs offer free tax help for taxpayers who qualify.
• The John Boner Neighborhood Centers is part of Indy Free Tax Prep, Central Indiana’s Network for Free Tax Preparation. As part of the IRS’ Volunteer Income Tax Assistance (VITA) program, they offer free tax preparation and other services to eligible residents.
• Indy Free Tax Prep is a network of Volunteer Income Tax Assistance (VITA) sites provide through the United Way of Central Indiana that offer free tax preparation to individuals and families with a combined household income of $64,000 or less. Taxpayers looking for services may dial 2-1-1 to find a nearby VITA location and schedule an appointment. If you have questions or want to volunteer, you can email taxprepindy@uwci.org.
• Indiana Legal Services offers free legal assistance for Hoosiers involved in a dispute with the IRS. The Low-Income Tax Clinic (LITC) is for clients whose income does not exceed 250% of Annual Federal Poverty Guidelines.
• The Neighborhood Christian Legal Clinic offers the Tax and Economic Justice program which also provides legal representation for clients involved in a dispute with the IRS. The website also provides numerous resources for correctly filing your taxes. This is for clients whose income does not exceed 250% of Annual Federal Poverty Guidelines. Dial 877-236-0730, ext. 4, and leave a voicemail.