This isn’t the year to procrastinate.
The IRS recently announced that the 2022 tax season will open on Jan. 24. That’s an improvement from last year, when the IRS didn’t begin accepting tax returns until February.
Of course, filers still have until mid-April to submit their 2021 returns without penalty. But here’s why it could benefit you to file your taxes earlier in the season.
1. You’ll get your refund sooner
Most people who file a tax return get a refund every year. This year, however, that could change. That’s because a lot of households received money in advance from the boosted Child Tax Credit, half of which was paid out in monthly installments between July and December of 2021.
Either way, if you think you’re due money, you should submit your tax return as soon as possible to avoid having your refund held up. This especially holds true this year, because the IRS has a lingering backlog from 2021.
Generally, it takes the IRS about three weeks to process refunds for tax returns that are filed electronically. If you’re submitting a paper return, you can expect at least twice that turnaround — or longer, given that the IRS may be short on agents to process paper returns due to the omicron surge.
These days, a lot of people are struggling to keep up with their living costs due to inflation. So having your refund in hand sooner could make your bills a whole lot easier to manage.
2. You’ll have time to make a plan if you owe money
Though many people end up getting a refund from the IRS each year, you may fall into the opposite camp where you owe money on your taxes, so the sooner you figure that out, the better. That way, you can come up with different ways to scrounge up that cash and avoid accruing penalties or interest for not paying the IRS in time.
You might also be in a position to make some last-minute moves that lower your tax bill. If you didn’t max out your 2021 IRA, for example, you have until this year’s tax-filing deadline to contribute more and slash your tax burden.
Keep in mind that filing your taxes early doesn’t obligate you to pay the IRS early. Taxes are due this year on April 18. If you submit your tax return in late January and see that you owe the IRS $1,000, you won’t be dinged as long as you make that $1,000 payment by April 18.
3. You may be entitled to stimulus funds
Last year, lawmakers approved a $1,400 stimulus check in March, but some people who were entitled to that money didn’t receive it. If your income changed in 2021, for example, you may have been eligible for a stimulus check without realizing it.
The good news is that you still have an opportunity to claim that money on your 2021 taxes. The sooner you do, the sooner you’ll get that payday.
Many people procrastinate on their taxes as a matter of course. But it’s really in your best interest to file sooner this year. Start gathering your tax documents as they roll in and prepare to get your return hammered out before we get too deep into tax season.