It Pays to File Your Taxes Early This Year — Here’s Why
The start of the tax season isn’t something most people like to celebrate. But the fact that the IRS will begin accepting tax returns on Jan. 24 this year is actually a good thing.
In 2021, the IRS was forced to delay the start of the tax season due to the pandemic. And the agency is still grappling with staffing shortages that could slow it down this year.
That’s why it really pays to get moving on your taxes. While the official filing deadline isn’t until April 18 (yes, you get three extra days this year), if you’re due a refund, you’ll want to get your return in as soon as you can.
The IRS is already backed up
As of Dec. 23, 2021, the IRS still hadn’t processed 6 million individual tax returns that it received. And the agency could experience further slowdowns in the coming weeks.
Across the country, COVID-19 cases are surging, thanks to the highly transmissible omicron variant. While the IRS isn’t making plans to shut down its field offices as it did in 2020, the staffing issues it’s already experiencing could get even worse considering infections, exposures, and quarantine requirements.
During the first half of 2021, the IRS had fewer than 15,000 workers available to handle the 240 million incoming calls it received. That amounts to one IRS employee per 16,000 inquiries. Not shockingly, only 7% of taxpayers were able to reach an IRS agent during the 2021 filing season.
To be clear, IRS staffing woes aren’t a new thing. In fact, to some degree, they’ve benefited taxpayers because the agency, in recent years, has had to limit audit activity due to a shortage of resources.
But in the context of the upcoming tax-filing season, staffing shortages are a bad thing because it could mean scores of delayed refunds. At a time when so many households are grappling with higher living costs due to inflation, that’s money many people can’t afford to wait for. So the sooner you submit your tax return this year, the sooner you can expect that refund to come through.
It also pays to get moving on your taxes if you didn’t receive a stimulus payment in 2021 but are certain you’re eligible for one. The most recent stimulus check was worth up to $1,400 per filer.
It typically takes the IRS about 21 days to process refunds from tax returns that are filed electronically. If you file on paper, you may be in line for double the turnaround time — or longer. So it’s in your best interest to get your return done as soon as possible if you’re owed money.
Even if you’re in the opposite boat, finishing your return early also makes sense. You don’t have to submit your actual tax bill to the IRS until the April 18 filing deadline, so if you get your return done sooner, it’s just another task to check off your list. Plus, seeing a large underpayment on your hands might prompt you to take steps to lower your tax burden, like sneaking more money into your 2021 IRA if you didn’t already max it out.
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