Filings trail 31 percent. Tax pro outlook looks glum.
Busy Season Barometer
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By Beth Bellor
Statistics for individual income tax return filings are virtually all in the red, with total returns received lagging 30.5 percent behind last year’s pace.
Meanwhile, tax professionals are lurching into the heart of the 2021 busy season with 43% forecasting a worse year ahead than last year’s COVID-ravaged season, according to the first respondents to this year’s annual CPA Trendlines Business Season Barometer. Only about 6 percent are expecting a “much better” year, and 19 percent a predicting a “somewhat better year. Join the Survey. Get the Results.
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The difference in the start dates of the tax seasons had a huge effect on the percentage changes in every category. In 2020, tax season began for individual tax return filers on Jan. 27, and in 2021 the IRS didn’t begin accepting and processing returns until Feb. 12.
Therefore, the first week of filing data compares Feb. 19, 2021, day 8 of the current season, to Feb. 21, 2020, day 26 of the previous season.
As of Feb. 19, the IRS had received 34.7 million returns, down 30.5 percent from 49.9 million. The gap was even starker in total returns processed, at 29.8 million down 37.9 percent from 48.1 million in 2020.
The agency has processed 86 percent of returns received so far this season.
“We put a lot of effort into being caught up and proactively asked for business tax info early. But 1040s are going slower,” according to a name partner in a two-partner, 18-person firm in Huntsville, Ala.
Electronic filings totaled 33.6 million, down 30 percent from 48 million. Tax professionals handled 12.8 million of those, down 39.7 percent from 21.3 million in 2020, and self-preparers sent in 20.8 million, down 22.2 percent from 26.8 million.
Professionals hold 38.1 percent of the individual income tax return market at the moment.
Visits to IRS.gov at 425.8 million were up 75.7 percent, the only positive, compared to 242.3 million this time last season.
Refunds totaled 16.6 million, down 55.7 percent from 37.5 million. The total amount of $47.7 billion was down 59.2 percent from $117.1 billion. The average refund differed only by 7.8 percent, $2,880 vs. 2020’s $3,125.
Direct deposit refunds at 16 million were down 54.8 percent from 35.4 million. The total amount of $46.8 billion dropped 58.7 percent from $113.4 billion. The average direct deposit refund at $2,920 was down 8.8 percent from $3,200 last season.
The vast majority of refunds, 96.7 percent, are via direct deposit. The average direct deposit refund is 1.4 percent higher than its paper counterpart.