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IRS is waiving late fees for those who missed filing or failed to file taxes in 2020, 2021
It turns out the pandemic was rough on the Internal Revenue Service along with most everyone else.
FOX 2 (WJBK) - Recently, the IRS announced they will be waiving late fees due to the issues caused by the pandemic.
This affects five million people who either didn't file taxes or filed late in 2020 or 2021.
Now the IRS says it plans to waive the late fee because of delays at the federal level due to Covid shutdowns . It adds up to essentially a debt of roughly $1 billion that is owed to the IRS will all be wiped away.
A new year often comes with a resolution to get your finances in order. It is a busy time for a savings coach like Adam Funk.
"I do investments, tax returns, help people manage debts and just monthly budgeting, cash flow analysis for clients," said Funk, a certified financial planner.
This year he'll have some good news to share with clients from the IRS.
"(They said) We're going to waive the penalty tax for tax years 2020 and 2021, there's about five million people that are going to be affected by this," he said.
It turns out the pandemic was rough on the Internal Revenue Service along with almost everyone else.
During the beginning stages of Covid, federal agencies shut down just before tax season. Two years later, the government stepped in, signing the Inflation Reduction Act. Part of which directed money to the IRS to aid in its recovery from the pandemic.
"Congress issued $80 billion dollars to help with auditing, but also to build the tech and get caught up, provide telephone support," Funk said. "Thankfully they have people to answer the phones now."
And here we are in 2024 and the IRS is still playing catch-up. As a result, they are taking one for the team when it comes to late fees.
"They are trying to be a little bit compassionate and saying we made a little mistake, we weren't sending the reminders to you to pay us, so we are going to waive the penalty tax on that."
This affects people who had to file late and incurred a penalty because of that.
"You still owe the tax but it's just the penalty for being so late paying it," he said.
The saving averages out to just over $200. And if you already paid the late fee, there is good news.
"Don't worry you are going to be getting a check in the mail, they will refund it to you," Funk said.
For the rest of us, financial advisors say now is the time to set an appointment with a preparer and make sure your paperwork is set aside for easy access.
The tax experts say the best time to get with a professional and file taxes is typically between February and March. That's considered the sweet spot where you can beat the rush of early and last-minute filers.