IRS saw major jump in individual returns in 2020

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The Internal Revenue Service estimates that an additional 6.5 million individual tax returns were filed for 2020, a major increase it attributes to large numbers of taxpayers filing returns to be able to claim coronavirus-related stimulus payments.

The projections were recently released in Publications 6186 and 6187, which also predict that four-fifths of all tax returns will be electronically filed by 2027, and that more than 90 percent of individual returns will be e-filed in 2020.

These publications present the number of returns to be filled with the IRS for 2020 through 2027, with projections by different individual, business and exempt return types, filing media (paper versus electronic) and IRS processing campus locations.

Among the trends noted in the two publications:

  • In calendar 2019, the share of total returns (individual and business) e-filed was 72.6 percent. This percentage is projected to rise to 75 percent in calendar 2020 and steadily increase to 81.3 percent by 2027.
  • Individual income tax returns make up over half of the grand total of return filings in any given year. For 2020, the projected share of the individual income tax returns that will be e-filed is 90.6 percent; current forecasts project that this ratio will reach 93.8 percent by 2027.
  • The CARES Act and recovery rebates led an influx of 3.2 million additional filers due to the rebate. Estimates are that most of these additional filers will file again in 2021 for many reasons, including a chance that there might be further refundable credits. All the additional filers are estimated to drop off in 2022.
  • The Taxpayer First Act made e-filing more widespread for business taxpayers. Taxpayer First also lowers the threshold for corporations and partnerships to e-file starting in 2021. In that year, the act will make e-filing mandatory for exempt and political organizations, with a temporary waiver for small business filers.

The publications also include the return projections by examination classes, paper return projections for the new 1040-SR and 1040-SP, and U.S. return projections of the new e-filing option for the 1040-X.

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