The dread of having to organize your tax filing each year can be enough reason for some people to wait until the last minute to get everything in. The process can still be daunting even though there are tools to help get everything together and file online. But according to one tax expert, there's still an excellent reason you should aim to be filing "as soon as you can" this year.
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The one silver lining of getting everything off to the IRS is the hope for a nice refund—especially if it comes back to you quickly. But since some filings can get flagged for errors or a closer look, it can tie things up even longer and keep that extra cash out of your pocket. Fortunately, experts say being on the ball with your filing can help ensure you aren't left waiting.
"Once you're relatively certain that you have all of your tax documents, file as soon as you can so that you can start investing your money," Eric Bronnenkant, head of tax at online financial adviser Betterment, recently told Fox Business. "Because, in general, the IRS doesn't pay you interest on your refunds. So getting that money in your hands sooner is better for sure."
Besides getting everything together well before your tax deadline and making sure it's correct, there are other ways you can speed things along. The IRS says taxpayers should opt to file electronically if they hope to see their refund within 21 days, as well as opting in to receive the funds by direct deposit instead of a check in the mail.
So, how soon is early? According to Jan. 8 news release from the IRS, the filing season for individual returns opened on Jan. 29. Most taxpayers now have until April 15 to get in their returns or request an extension from the agency.
And there may be another reason to push yourself for an earlier return. On Dec. 19, the IRS announced it would be providing $1 billion in relief for 4.7 million taxpayers and organizations that currently owe back taxes. The agency said most of the funds would go towards those making less than $400,000 per year.
In its statement, the IRS explained that it had stopped sending out automated reminders to taxpayers in early 2022 due to COVID-19-related effects on its operations. This meant that some people may not have been aware they were accruing failure-to-pay penalties.
"As the IRS has been preparing to return to normal collection mailings, we have been concerned about taxpayers who haven't heard from us in a while suddenly getting a larger tax bill," IRS Commissioner Danny Werfel said in the statement. "The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation."
Best Life offers the most up-to-date financial information from top experts and the latest news and research, but our content is not meant to be a substitute for professional guidance. When it comes to the money you're spending, saving, or investing, always consult your financial advisor directly.
