Filing 2020 Return before 2019 was processed - Stimulus payment

[Bree]

Hi there,

I filed a paper return for the 2019 taxes for my client back in April which is still not processed. The IRS suggests not to re-file yet. Does anybody else still have outstanding tax returns from so long ago?

The client now did not receive the second round of stimulus payments. I´m wondering if we can just go ahead and file the 2020 return. I don´t see anything to put in from the 2019 return for the Recovery Rebate Credit, but I am wondering if it will get processed without the 2019 return being done or if there is any other disadvantages I´m not tracking right now.

Thanks for your advice!

[sjrcpa]

Go ahead and file 2020 when its ready. efile it.

Eventually IRS will process the paper 2019 return.

There are many paper returns that have not been processed.

[itonewbie]

Your client, whose 2019 return has yet to be processed by the IRS, did not receive EIP 2 because §6428A dictates that the amount payable is determined by the taxpayer's 2019 return, unless the non-filer is a SS, RB, or VA beneficiary.  This will all be reconciled when your client files the 2020 return with Recovery Rebates Credit.

As for the processing time, it is not at all surprising considered that the IRS received about 16 million paper returns for 2019 from individuals last year and still had 7.1 million of those unprocessed as of Dec 31, 2020.  To put this into perspective, that's over 40% of the paper returns they received.

Although your client was clearly ahead of many people, having filed the 2019 return back in April, I'm not sure how the IRS prioritizes those millions of unprocessed returns.  What I know is that your client should not file a duplicate return for 2019 because that could just complicate matters.  All the more reason to make sure your client doesn't file on paper this year, if possible.

P.S. The reason you don't see anything "from the 2019 return for the Recovery Rebate Credit" is that the law says that it is only applicable to TY2020.  If you are not familiar with the various tax laws that were enacted last year (and there's quite a bit), you may like to attend some CPE classes and read up on them.

https://www.irs.gov/newsroom/national-taxpayer-advocate-delivers-annual-report-to-congress-focuses-o...