Taxpayers across the nation rejoiced last month when they got the news that they'd have extra time to file their tax returns for the 2019 tax year. Ordinarily, the usual April 15 deadline would have applied to getting your returns in on time, but because of the coronavirus pandemic, the IRS has now given people until July 15 to file their taxes and pay any tax bill outstanding.
Procrastination aside, though, there are actually some really good reasons why many people should go ahead and file their returns sooner rather than later. At the same time, though, there's one reason many people will want to wait and specifically not file their returns to make sure that something a lot more pleasant comes their way. Here, we'll look at the pros and cons of filing your returns now.
Why you shouldn't wait
It's always good to get your taxes done as soon as possible. As painful as tax preparation can be, getting it done and off your plate means not having to worry about when you're going to make the time to complete your returns. In particular, there are three common reasons to file quickly.
First, if you're expecting a refund, filing your tax return as soon as possible is usually a no-brainer. That's because you won't be able to get your refund check from the IRS until you file a return for the year. The longer you wait, the longer you're delaying getting your money back -- and the sooner you file, the sooner you'll receive your refund. The fact that you have three extra months to file this year shouldn't make you more willing to wait longer than you have to before seeing your refund check.
Second, you might need your 2019 tax return to do certain types of business. For instance, most loan applications for buying a home require that you provide the most recent financial information available, and your lender might not be satisfied with a 2018 tax return at this point. Similarly, applications for financial aid often require students to use information from their parents' tax returns -- so not having them ready could be problematic in getting assistance with college costs.
Finally, the recently announced coronavirus stimulus checks from the federal government are contingent on your adjusted gross income. If your income on your 2019 tax return will be less than $75,000 for singles or $150,000 for joint filers, then you can establish full eligibility to receive $1,200 per adult and $500 per child as part of your stimulus check. If you don't file, then the IRS will use your 2018 income -- and if it's above those thresholds, then you could get only a partial stimulus check or even no check at all.
The flip side of stimulus checks
That last reason also provides a reason not to file your 2019 tax returns sooner than you have to. If your financial situation is the reverse of the example described above -- you made much more in 2019 than you did in 2018 -- then filing your 2019 return could actually prevent you from getting a coronavirus stimulus check. Specifically, if your 2018 income on your tax return was below the thresholds and you haven't filed a 2019 return yet, then the IRS will use the 2018 figures and potentially send you a check. However, if you file your 2019 return with income levels above the threshold, then you'll see that check amount either reduced or eliminated entirely.
In that case, it makes sense not to file. Even if your 2020 income is going to be over the threshold, the IRS has suggested that it won't try to take back the money it pays in early stimulus relief to those who qualified using prior-year income. In other words, the federal government has explicitly said it expects taxpayers to be tricky in doing whatever they can to make sure they get their coronavirus money -- and apparently, it's fine with that.
Get it done
Having a choice to put off doing your return gives you some more flexibility in dealing with your tax planning, so if you're dealing with lots of coronavirus-related challenges right now, you might find the extra time helpful. However, unless you'd put your stimulus check at risk, it's still nice to get your taxes done once and for all. Think about that before you decide just to ignore your taxes until July.