Retirement doesn’t end our playing the income tax game. It’s that time again when we need to settle up with Uncle Sam. Yes, the yearly joy of filing our income tax return for the past year. Well, I tried to settle with them but shortly after sending off the return I got a 2020 e-File rejected by the IRS. They refused my return and my money. 

I’m one of those personal finance ducks who refuses to over withhold just to get a later refund. I always owe, wait to file by mail, and just live my life like the ancient pre internet days. But the pandemic strikes again, making this year different. We’re being warned it’s best to e-File because the IRS has a bit of a backlog from last year. So I decided to abide by recommendations to help them out a little and possibly myself by trusting the digital gods to process my tax return and correctly debit my bank account. But alas, not so fast buckaroo.

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Getting A 2020 e-File Rejected Isn’t a Problem For Only Those Wanting A Quicker Refund

Every year but this I saw little need to bother with e-Filing and instead mailed my return with my payment check. That’s exactly what I did last year. Things were just starting into the pandemic unknowns at the time. I calmly mailed my 2019 federal income tax return and payment check. I then saw that my tax payment check had cleared my bank a couple of weeks later and assumed all was cool. Who would cash your check and not finish the work associated to it? Silly me. It appears they gladly cashed my check but threw my return in their massive pile of what now numbers in the millions tax return backlog. 

My First Clue My 2019 Tax Return Was Never Processed

It now seems like years instead of months ago. Many of us were being sent stimulus money in the spring of 2020. I would check the get my payment website and there was no info. A little later they added to their portal a way to use 2018 AGI info and input a bank account so they could directly deposit the stimulus money. It all worked out. I thought it strange my 2019 AGI wouldn’t work on their portal since I knew they had cashed my 2019 tax payment check. So I just went about my life thinking it’s simply a delayed database issue. I was so naive. 

The Second Clue That My 2019 Tax Return Was Collecting Dust Somewhere

Fast forward to the second round of stimulus. Again, as I heard of people gladly receiving their stimulus direct deposits or debit cards in the mail by early January, I got “no info” on the IRS site and received no stimulus money. This time there wasn’t a way to add information or a bank account. Instead it was recommended to take the credit on our 2020 tax return when we file. Cool, I’ll owe a little more than $1,200 anyway so I’ll write a smaller check to settle things. 

The Final Clue: My Day Of 2020 Income Tax Reckoning Blocked By The IRS e-File Masters

So I still owe the IRS a little bit and wanted to get it over with a month earlier than usual. I also wanted to make it easier for them to send me any stimulus money for this year going forward. I would rather handle my tax withholding than have the government hold onto it until I could redeem a possible credit next year. So I e-Filed my Federal return and soon after got their e-File rejected email. Why? The 2019 AGI figure used doesn’t match their records. What gives, it’s correctly entered?

Now what?

What else do you do but search the web. There’s lots about e-File rejected tax returns as it relates to people desperate to get their refund. None about people who owe money and want to e-File. I suppose I’m an oddball. There are many reasons for the IRS to reject e-Filed taxes. Like issues with an entered social security number or birth date not matching their system data. Mine was simply last year’s tax return AGI related.

I finally found the answer to my issue on an e-File rejection code page. Their take made absolute sense. I have no other assumption than my 2019 return is still sitting in a pile somewhere. So I simply changed my 2019 AGI to $0 on my e-File application. I resubmitted my Federal return and the e-File was now accepted by the IRS. This absolutely tells me my 2019 Federal tax return is still collecting dust somewhere and if I hadn’t e-Filed my 2020 return I would most likely not receive any stimulus money this Spring. 

Worried About Being Accused Of Falsely E-Filing My 2020 Federal Taxes?

No, not at all. I agree with what the eFile.com folks say here:

“Simply a reflection on what the IRS might have stored in their system at this point in time. They might not be an actual reflection whether you did or did not file a 2019 return. The 2019 AGI is used as an identification method when e-Filing your 2020 return, thus you are identifying yourself with what the IRS system has on file at this point in time.” 

My 2020 e-File Experience Takeaways

Keep a copy of that cleared IRS 2019 Income tax check that cleared the bank April 2020 with my 2019 tax return copies

I can assume that the IRS will eventually clear their pandemic caused tax return backlog. But I won’t hold my breath. If they fail to get mine into their system they will come knocking. Usually around 3 years from the filing deadline. A time when this is all a distant memory. I will need that cancelled check as evidence they had my return and biffed it. 

Print evidence of the 2020 income tax debit to my bank account and keep it with my 2020 return copies

I will have the bank account debit info printed much like a cancelled check. Why? Because when it comes to the Government and IRS I believe in CYA. Guess what? No surprise here either, the IRS debit swiftly hit my bank account. They do like getting paid.

Maybe I’ll get stimulus sooner instead of waiting until next year to claim it as a tax credit

New stimulus will be based on either 2019 or 2020 tax return info. Since my 2019 return has not yet been processed I should get any qualified stimulus funds based on this accepted e-Filed 2020 tax return. If not, I’ll just adjust my withholding to reflect the future tax credit for non-received qualified stimulus when filing taxes next year. I’m sticking to my policy of starving the tax monster and never purposely getting a tax refund. 

I always try to cover everything when it comes to income taxes. In what I call my previous life, I spent several years in the income tax industry with some IRS interactions. It’s always best to be on the legal side of things and cover your keister at all times when it comes to the tax monster. I use the term tax monster because it will happily over-eat without squabbling but will hunt you down and destroy you if you don’t feed it what it thinks you owe. 

If you make a habit of mailing in your tax return as I have then it’s best to be aware. Your 2019 tax return may just be sitting in a 80 foot pile of paper somewhere resulting in e-File rejected from the IRS. That may cause a delay in any 2021 stimulus money and when your 2020 income taxes will be processed. It’s also best to make sure you have all of your supporting paper records in order for a possible later visit from the tax monster. Hard to know if something will go wrong with the IRS backlog efforts. It’s always better to be safe than sorry.