Let’s face it, we are all guilty of procrastinating things that we don’t find enjoyable. There is one thing we love putting off until the last minute more than anything else: paying our taxes. According to IRS data, in a normal tax year, about 30 million taxpayers wait until the last two weeks before Tax Day to file their returns. This year, the deadline to file your 2021 taxes is April 18, 2022. We have researched reasons why filing your taxes early could be to your benefit and give you that kickstart to get started on them sooner rather than later.
File Early for a Faster Refund
By filing early, you can give yourself peace of mind, and check this important item off your to-do list. Once the IRS says it will begin processing returns, why not turn yours in and get this unpleasant task over with? Some people count on their income tax refunds to pay major bills. Filing early puts the money in your hands sooner and may help you avoid taking out an expensive short-term loan to cover those expenses, especially if you’re still paying off your holiday bills.
File Early to Avoid the Tax-Season Rush
Filing early gives you time to fully understand any changes to tax law or deal with changes in your life that may alter your filing status. Mistakes from rushing at the last minute can trigger audits that can lead to penalties and interest. Your certified public accountant (CPA) or other tax preparer will not be as busy in January or February as in April. Early access means your CPA will have additional time to consider your situation more carefully and help you with your return. If you are in the process of buying a home or going back to college (and applying for financial aid), you'll need information from your most recent tax return. Preparing your taxes early will provide you with the most up-to-date information available.
Time to Save
When you’re facing an income tax bill instead of a refund, it’s natural to put off filing as long as possible. But if you go ahead and fill out your tax forms and file them, you’ll know exactly how much you have to pay—and you won’t have to pay in full until Tax Day. If you owe money to the IRS, filing early gives you time to save up. Remember, you don’t have to pay until the filing deadline. Waiting only to find out that you owe more than you expected could put a strain on your budget. Plus, the more time you have to come up with the money, the less likely you are to break your budget or drain your emergency fund. So don’t spend the first part of the year with your head in the sand. Get the facts about what you owe and make a plan to tackle your tax bill.
File Early to Avoid Identity Theft
The sooner you file, the less time there is for an identity thief to file in your name and take your refund. This can lead to all sorts of problems, especially if the thief claims false deductions, fails to report income, or otherwise taints a tax return in your name. Fixing a mess like this can take months. Unfortunately, you may not know you're a victim of identity theft until the IRS notifies you that there's a possible issue with your return. The quicker you file, the better your chances are of protecting yourself from scammers.
Important dates & quick answers to other questions you might have about filing your tax return:
- When can I start filing taxes for 2021? The IRS will begin accepting and processing 2021 tax returns on Monday, January 24, 2022.
- What if I need to file for an extension? A tax extension request has a deadline of Monday, April 18, 2022.
- Will the IRS extend the tax deadline again in 2022 like it was last year? While the deadline had been extended for 2019 and 2020 filing, the 2021 tax deadline has not been extended. The current tax deadline is Monday, April 18, 2022.
*Third Coast Bank SSB does not provide tax services or advice*