WASHINGTON—The annual tax-filing season is about to start, and it could be much messier than usual.
Many taxpayers will forgo their usual in-person meetings with tax preparers due to the pandemic. Millions will need to file tax returns to get the balance they are owed for stimulus payments. Others will be surprised to learn that unemployment insurance benefits are taxable, and some will face the complexities of state-tax rules for remote work.
The economic disruptions of 2020 will get reflected in the tax returns filed in the coming months, reshaping people’s typical patterns and changing their usual tax refunds. All of that will happen as the IRS implements new laws and completes the second, $600 round of stimulus payments approved by Congress last month.
“It’s going to be a nightmare,” said Nina Olson, who was an in-house IRS watchdog from 2001 to 2019. “They’ve got a rough filing season ahead, no matter how well you plan for it.”
In a typical year, the IRS would begin allowing people to file returns in late January. The agency hasn’t set a start date this year but has been programming its systems and is on track, said Erin Collins, Ms. Olson’s successor as national taxpayer advocate.