If you have a tax refund, the sooner you file your return, the sooner you’ll have the money you need.
- The IRS expects processing delays this year.
- Filing early could help you get a refund faster or give you more time to plan for a tax bill.
Wouldn’t it be fun if more of us enjoyed filing taxes, if collecting documents and reading the new tax law left us tingling? We’d call friends to share new deductions, and at parties, we’d brag about keeping the perfect amount last year. Unfortunately, this fantasy could not be further from reality. According to IRS data, about 30 million of us wait until the last two weeks before taxes are due to file our returns.
According to the IRS, it’s a good idea to file your taxes as early as possible this year. Here are six reasons why.
1. Faster refund
The IRS says it expects processing delays this year. In a “normal” year, the IRS can usually issue refunds within 21 days, but the agency says it could take longer this year.
This is why:
- Raw Returns: The IRS still has 6 million unprocessed 2020 returns, most with taxpayer errors.
- Modified Returns: As of January 1, 2022, the agency was also handling more than 2 million amended returns.
- Unemployment Corrections: The IRS continues to process corrections for taxpayers who overpaid 2020 unemployment insurance taxes.
- Pandemic issues: COVID-19 has persisted and the agency remains unstaffed in some areas of the country.
- Many unique changes: Due to the oddities of 2021, such as the third stimulus payment and child tax credit payments, it takes longer to verify returns.
Given all of these factors that get in the way of the system, filing early, and filing electronically, may be your best chance of getting a faster refund.
2. Less stress
A 2018 TaxSlayer survey revealed that about 52% of us find the entire tax filing process stressful. And let’s face it, anything we put off until the last minute, whether it’s going to work or buying a birthday present, is more stressful when we’re short on time. The sooner you file your return, the more relaxed you’ll feel as the tax filing deadline approaches.
3. Protection against identity thieves
No one suggests you file before you gather all the documents you need to get the job done right, but the risk of identity theft is all the more reason to do it as soon as possible.
This is how tax identity theft can unfold:
- You file your taxes.
- The IRS rejects your paperwork and informs you that your Social Security number has already been used to file.
- The agency tells you that a refund has been deposited into “your” Bank account (it really is the scammer’s account).
Fortunately, you can still file your taxes, but not until you’ve resolved the situation. There is no way of knowing how long it will take, especially with the current delay from the IRS.
Therefore, the sooner you file your tax return, the less time criminals have to file a fraudulent return using your personal information.
4. Less competition for tax professionals
If you plan to have your taxes done by a professional, the sooner the better. Waiting until later in tax season means competing with the millions of other taxpayers who have also waited.
Read more: The best tax software
Let’s say you do your taxes in February. You learn that you underpaid in 2021 and now owe $2,000. Most taxpayers have until April 18 to file a return or extension this year. That gives you two months to calculate the amount due without withdrawing the funds from your emergency fund.
6. You have your financial data organized
An often overlooked benefit of filing early is how it forces you to get your financial documents in order. If you decide buy a house or car later this year, you’ll have almost everything you need to apply for a loan in one place.
Another advantage of doing your taxes early is that you can sit back and relax while the world around you struggles to meet the deadline.
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