Thousands of IRS employees are expected to lose their jobs as Elon Musk’s Department of Government Efficiency, or DOGE, continues widespread cuts to federal spending. 

The move comes roughly three weeks since the opening of tax season and could impact millions of taxpayers who will file before the April 15 deadline, experts say.

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IRS funding has been targeted by Republican lawmakers since former President Joe Biden approved $80 billion for the agency via the Inflation Reduction Act, or IRA, in 2022.

The IRS layoffs have targeted probationary workers with less than one year of service — or longer in some cases. There were an estimated 15,000 probationary employees at the agency, many who were hired via IRA funds, according to a lawsuit filed by the National Treasury Employees Union and others on Feb. 12.

An estimated 6,000 to 7,000 IRS workers may be impacted, according to reporting from CBS News and the Associated Press.

The U.S. Department of the Treasury didn’t respond to CNBC’s request to confirm these numbers.

These mid-season staffing cuts could significantly impact filers, experts warn. So, with major IRS changes underway, here are some key things to know.

Senate Finance Committee Democrats on Tuesday warned that IRS staffing cuts would cause a “tax refund train wreck.” Tax experts, however, say filing an accurate, electronic return should avoid any such issues. 

“If you have a good submission, you may not notice any change,” said Tom O’Saben, an enrolled agent and director of tax content and government relations at the National Association of Tax Professionals.

Typically, it takes 21 days for the IRS to process an e-filed tax return. But that timeline could be longer for “corrections or extra review,” according to the agency.

Reduced staffing could make processing longer if there’s an issue with your return, experts say.

The IRS system could flag your return for incorrect personal details or missing information, which could require contact with the agency for assistance, O’Saben said.

“We haven’t seen any service delays yet,” he said. “But we’re going to. It’s just going to be a reality with less people.”   

“Even if the staffing cuts don’t impact process, there’s the potential for a government shutdown next month” as lawmakers debate spending negotiations, he said. “That will compound problems.”

Error-free, electronically filed returns may not be impacted by a government shutdown. But there could be further delays if there’s an issue with your filing, experts say.

Typically, the best way to speed up your refund is by filing electronically and choosing direct deposit for your payment, according to the IRS.

You can check the status of your refund via the agency’s “Where’s My Refund?” tool or the IRS2Go app.

Although inflation has eased considerably, in many ways, it is still alive and well.

The consumer price index, which measures the cost of a wide-ranging basket of goods and services, has fallen gradually from a 9.1% pandemic-era peak in June 2022 to 3% in January. But it is still above the Federal Reserve’s 2% goal.

“The progress toward 2% inflation has stalled out, and the Fed knows it,” said Greg McBride, chief financial analyst at Bankrate.com. Federal Reserve officials have also expressed concern about the impact tariffs may now have on inflation.

To compare, regular Treasury bonds could lose value over time if the interest they earn is below the rate of inflation. Currently, the bellwether 10-year Treasury bond is yielding just below 4.5%. (The same goes for the low yields on certificates of deposits when it comes to protecting long-term buying power.)

Alternatively, the principal portion of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. In this case, as inflation rises, the value of the principal will rise as well to maintain its value.

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For example, an investor buys $1,000 in TIPS at a fixed rate of 1%. If inflation rises by 2%, the principal will rise to $1,020. The rate will stay the same 1%, but future interest payments are multiplied by the new principal amount of $1,020, so payments are $10.20 for the year (or $5.10 every six months, since TIPS pay interest twice a year).

TIPS are issued in 5-, 10- and 30-year maturities and when a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.

The threat of tariffs on imports is causing more investors to consider increasing their exposure to TIPS to mitigate inflation concerns, according to a recent report by Wells Fargo Investment Institute.

“TIPS continue to be a valuable tool for protecting purchasing power in an inflationary environment,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.

“With yields currently near decade highs, they’re certainly more attractive than in recent years,” said Boneparth, a member of the CNBC Financial Advisor Council.

However, TIPS aren’t immune from losses even in an inflationary environment, according to Colin Gerrety, a certified financial planner and client advisor at Glassman Wealth Services in Tysons Corner, Virginia.

“Just look at 2022 as an example,” he said.

“Let’s say inflation spikes and interest rates rise at the same time,” he said, as they did that year. “TIPS might actually lose money if the negative impact from the rise in rates exceeds the adjustment that occurs due to inflation.”

In 2022, rising interest rates hurt TIPS and other bonds; TIPS had a -11.85% return that year, although that was still better than U.S. Treasurys.

Consider the potential impact of tariffs on inflation going forward, said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California.

She recommends a strategy that combines fixed-income TIPS with dividend-paying stocks and laddered CDs for short-term cash flow needs. Sun is also a member of CNBC’s Advisor Council. 

“I usually advise clients to view TIPS as one part of a diversified portfolio rather than a standalone solution,” Boneparth also said.

“While they offer the benefit of inflation-adjusted returns, it’s important to consider factors like tax treatment and the potential for lower returns if inflation moderates,” he added.

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In response to a request from Sen. Elizabeth Warren, the Federal Deposit Insurance Corp. will review President Donald Trump‘s recent move to lay off more workers at the watchdog agency.

Backed by the Trump administration, Elon Musk and his advisory group, the Department of Government Efficiency, reduced the FDIC staff by around 1,000 employees so far this year through buyout offers and the layoffs of probationary employees, according to reports. The additional firings were part of a larger effort to shrink the federal bureaucracy.

The FDIC is already severely understaffed, which “threatens the stability of the banking system,” Warren, D-Mass., said in a letter sent on Feb. 10 to Inspector General Jennifer Fain and shared exclusively with CNBC. Senators Raphael Warnock, D-Ga., Chris Van Hollen, D-Md., and Lisa Blunt Rochester, D-Del., also signed the letter.

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Fain responded to the lawmakers in a letter dated Feb. 19, which was also shared exclusively with CNBC, saying “the full effect and impact on the structure and mission of the FDIC due to the hiring freeze, deferred resignations, and any reshaping and restructuring remain to be seen.”

Further, Fain said, “we will be adapting our oversight work to better understand and determine the effect of recent changes and their impact on the FDIC to maintain stability and confidence in nation’s banking system.”

In a statement Thursday, Warren said she was “pleased that the FDIC Inspector General will review the threats to the stability of the banking system caused by the Trump Administration’s recent buyouts, terminations, and job rescissions to bank examiners and other FDIC staff.”

“These cuts threaten the reliability and integrity of federal deposit insurance and inhibit the FDIC’s capacity to ensure the stability and confidence that underpin our nation’s banking system,” she said.

In the initial letter to Fain, the senators said staffing shortages directly contributed to Signature Bank‘s failure in March 2023.

The lack of examiners “led to a series of supervisory delays, canceled or postponed exams, and quality control issues in the supervision of Signature,” the letter said.

“The lesson learned in this case was that a shortage of cops on the beat can threaten the safety and soundness of the banking system and pose risks to the Deposit Insurance Fund,” the letter stated.

The incident marked the largest U.S. banking failure since the 2008 financial crisis, and one of the biggest bank failures in U.S. history. The unexpected shutdown also caused widespread concern among consumers about their deposits, their bank and the banking system.

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