Waiting on a Tax Refund From Last Year? Here's Some Good News

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  • The IRS has a backlog of 20 million unprocessed tax returns.
  • The agency plans to hire 10,000 workers to get caught up.

You may not have to wait much longer for your money.

As we work our way through the 2022 tax season (during which we're filing returns for the 2021 tax year), Americans are being urged to submit their taxes electronically. The reason? Paper returns take a lot longer to process than those filed electronically. Filers who want to see their refunds hit their bank accounts sooner should avoid paper returns at all costs.

This especially holds true this year. Right now, the IRS is sitting on a massive backlog of unprocessed tax returns -- a good 20 million. Many of those returns are from previous tax years, which means some filers may already be waiting a long time to get their money.

If you've yet to have an older tax return processed, you may be growing increasingly frustrated by the day. But there's a bit of good news in that regard. The IRS just announced plans to hire 10,000 new workers to get caught up on its backlog. And so the agency could end up pumping out tax refunds for old returns sooner than anticipated.

The downside of filing on paper

People who have been filing taxes on paper for years may be used to that setup and resistant to change. But there are many drawbacks associated with filing a paper return -- such as having to wait longer for your refund.

But that's not all. With a paper return, you're more likely to make a mistake on your taxes because you won't have software to prevent math errors. And mistakes on your tax return could delay your refund.

Meanwhile, all it takes is staffing issues at the IRS to cause filers to have to wait an extraordinarily long time to get the refunds they're owed, since paper returns have to be processed manually. While it's a good thing the IRS is taking steps to ramp up staffing now, it's a move that should've been done months ago.

The agency says it plans to fill 5,000 positions within the coming months, and then onboard another 5,000 new hires over the course of the next year. To be clear, though, filers who submit a paper tax return this season won't necessarily see it processed any faster. It will take some time to get the agency's new employees up to speed.

What may happen, though, is that the IRS is able to process older tax returns sooner. And that's a good thing for those people who really need their refunds to cover everyday bills.

Not a new problem

The IRS got behind on processing tax returns during the pandemic after being forced to close its field offices in 2020. But to be clear, the agency has been dealing with staffing issues for many years -- so much so that it's been limited in its ability to conduct tax audits. Hopefully, the new IRS hiring spree will allow the agency to not only work its way out of its current backlog, but also process tax returns more efficiently going forward.

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