When it comes to the best time to file taxes, some people like to file early and others like to file later, close to tax day. So far this tax season, the IRS has received almost 19 million returns (opens in new tab) — about 2 million more than this time last year — which indicates that this year, more people are choosing to file early. Many tax experts suggest that it’s best to file early, but whichever side you’re on, here are some things to keep in mind.
Filing Taxes Early
There are a number of benefits to filing your taxes early. Here are some common ones.
Get your refund faster. The sooner you file, the faster you can get your tax refund. Just make sure that you e-file, and opt to receive your tax refund by direct deposit. If you’re not already one of the 8 out of 10 Americans who get a direct deposit tax refund, it’s worth considering. In fact, it’s the best way to receive your tax refund, according to the IRS, and it’s safer, faster, and greener than getting your refund through a physical check in the mail.
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By filing your taxes electronically, and opting to receive your payment through direct deposit, you can usually expect to receive your tax refund within 21 days. If you choose to paper-file, you’ll have to wait at least four weeks for funds to hit your account. Expect to wait even longer if you choose to receive your refund through the mail. Regardless of how you file, if there are any errors on your taxes, you’ll likely experience delays in receiving your refund.
More time to pay your taxes. Filing early can also give you more time to pay if you owe on your taxes. You’ll be able to figure out how much you owe and plan to pay by the April 18 tax deadline.
Limit tax fraud. Filing early can also help limit your chances of being a victim of tax scams. Filing early makes it more difficult for someone to use your name and Social Security number to get access to your tax refund. You can also create an identity protection PIN with the IRS to help prevent fraud from occurring.
Filing Taxes Later
Although filing your tax return earlier is recommended by tax experts, there are some reasons you may want (or need) to wait a bit longer before you file.
Need required documentation. For one, before filing your tax return, you’ll need to make sure you have all the required tax documentation. While some forms, such as W-2s (opens in new tab), are required to be sent before January 31, they sometimes don’t arrive until early February. There are also other important tax reporting forms that could be received later than the end of January.
Waiting on IRS guidance. Even though it doesn’t happen often, you may want to wait to file because the IRS is making a determination that could impact your taxes. For example, the IRS recently asked taxpayers in 21 states to hold off filing their taxes until they clarified whether certain special state payments were considered taxable. Although the agency decided that for most states, those “stimulus check” payments are not taxable and would not need to be reported on 2022 federal returns, some people worried that filing before the IRS determination would mean potentially having to amend returns.
More time to make IRA contributions. If, for example, you own a small business, or are self-employed, you might opt to file your taxes a little later in tax season to have more time to fund your individual retirement account (IRA). You can generally make IRA contributions for the 2022 tax year up until the tax deadline, which for most people is April 18.
Don’t Miss the Tax Deadline
Overall, if you have the required information to complete your tax return, there’s no harm in filing early. You’ll have more time to make sure your tax return is accurate, and you won’t run the risk of missing the tax deadline. Just make sure that you have all the required documentation ready to file a complete and accurate return.
On the other hand, in some cases, it might be better to file your taxes a little later. Of course, whatever you do, you’ll want to file before the tax deadline to avoid late filing penalties, unless you applied for an extension.
When is the tax deadline? This year, the tax deadline for most taxpayers is April 18, because the typical April 15th deadline falls on a Saturday. It also coincides with the District of Columbia’s Emancipation Day holiday on the 17th. Taxpayers who are victims of natural disasters in areas designated by the IRS, have until May 15, 2023, to file their 2022 individual and business returns.