87% of People Plan To File Their Taxes Early — Here’s Why You Should Be One of Them
Tax season started 17 days earlier this year than last, and the IRS adjusted the calendar for one reason and one reason only. 2022 is shaping up to be a mess, and the earlier people file their taxes, the smoother things will go for all parties involved.
“The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022,” said Robbin E. Caruso, partner and co-lead of Prager Metis’ National Tax Controversy Practice. “The past two years we have seen the IRS push the traditional filing deadlines due to COVID-19. This year, there is no intent to push back the April 18th deadline, so it is important to get organized now and allow plenty of time to file your return and make certain you do not incur penalties for not filing or filing incorrectly.”
The good news is, the masses seem to be heeding the call.
A recent GOBankingRates study of 1,000 American adults found that nearly 9 in 10 taxpayers — 86.8% — are planning to file well before the deadline.
Here’s why you should do the same.
The IRS Is Drowning
Tax Day was postponed two years straight, and the IRS is still working through a millions-long backlog of 2020 returns that were filed last year, according to NPR. Its workload has soared in the face of all the new stimulus programs and the mountains of paperwork they generate, but the agency has been horribly understaffed and under-resourced for years, often the victim of intentional fiscal starvation by lawmakers.
The IRS has been urging taxpayers from the outset to expect delays and to do everything they can to avoid mistakes that will lengthen those delays. Even so, the study showed that about 10% are planning to wait until the week of Tax Day to file their returns — mostly the youngest respondents ages 18-24 and the oldest, those 65 and up.
No matter the age, one week is cutting it way too close in a tax year as wild as this one.
For millions of Americans, the third round of stimulus complicated their 2021 taxes — or at least required them to keep track of a few more crucial documents from the IRS.
For example, the $1,400 Economic Impact Payments don’t count as taxable income, but if you didn’t receive the third stimulus and were eligible, you may be eligible to claim a 2021 Recovery Rebate Credit on your tax return. Advance Child Tax Credit recipients have to reconcile the payments they received using form 6419 — if you earned extra income in 2021, you might have to pay some of it back.
By starting early, you’ll give yourself time to gather all those new and unfamiliar documents and navigate the added complexities of this already complex process.
A thankfully tiny percentage of respondents — 1.9% — plan to wait until the day of the deadline, April 18, to file their taxes. That level of commitment to procrastination would be irresponsible even during the smoothest of tax years, but in 2022, self-interest alone should convince reasonable people to get a jump on things — the sooner you file, after all, the sooner you get your refund.
On Jan. 24, when tax season began, the IRS sent out a notice that mentioned the word “refund” 18 times. It said, in so many words, that the IRS can get you your money quickly — but only if you file accurately and early.
You’ll Have Time To Prepare If You Owe the IRS
Even if you’re one of the 1.2% who plans to seek a filing extension, you have to pay any taxes due by April 18. Although it’s natural to want to pull an ostrich if you know you’ll owe a balance, the worst thing you can do is delay filing. In fact, by getting started early, you’ll leave yourself time to strategize and budget before the due date arrives.
“File,” Caruso said. “Even if you can’t pay, get current on your 2022 estimates and then deal with the IRS on any past problems that you may have. The IRS offers many options to address tax problems, including payment plans over time to address any taxes that you owe. If you need help, reach out to an experienced tax controversy professional.”
You should be in a proactive state of mind this season, but don’t let the fear of filing late spur you into filing before you’re ready. That can be just as bad — worse, even.
“One of the most common mistakes taxpayers make is filing their income tax return too early, increasing the risk of not including all 2021 tax information accurately in their return filing,” Caruso said. “This may cause significant delays in processing returns and receiving refunds.”
More From GOBankingRates
- Top 10 Richest People in the World
- Get Top Holiday Shopping and Savings Tips
- 5 Things You Must Do When Your Savings Reach $50,000
- 10 Things to Do Now If Your Credit Score Is Under 700
Methodology: GOBankingRates surveyed 1,000 Americans aged 18 and older from across the country between January 31 and February 1, 2021, asking six different questions: (1) How do you plan on filing your taxes for this year?; (2) When do you expect to file your taxes this year?; (3) How much do you expect to receive in a tax refund?; (4) What do you plan to do with your refund? (Select all that apply); (5) Do you feel confident you are receiving all the deductions you feel qualified for?; and (6) If you received the Child Tax Credit this past year (2021) how do you feel it will affect your taxes? All respondents had to pass a screener question of: Do you plan to file taxes in 2022?, with an answer of “Yes”. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.