The coronavirus has changed many aspects of American life. One big change is that tax returns are no longer due on April 15 for the 2019 tax year. Instead, taxpayers have until July 15 to submit returns and pay whatever they owe.
But while you have more time to pay your taxes, you may not want to wait until the deadline. In fact, there are three big reasons it can make sense to file ASAP, or at least before the customary April 15 due date.
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1. You could get a refund sooner if you're entitled to one
Around three-quarters of people who file their taxes get a refund, usually within 21 days of the time they e-file or within six weeks for mailed returns.
If you're among the majority getting money back, the sooner you file a return for 2019, the faster you can get the money into your account. The funds could come in handy if your income is cut because of the pandemic or if you need extra money to stock up on supplies during this time of social distancing.
2. You could get a bigger stimulus check if your income in 2019 was lower than in 2018
The CARES Act entitles most Americans to receive stimulus checks. These are worth up to $1,200 per person, $2,400 per couple, and an additional $500 for each child.
The check you'll get is based on your income. You'll get the full amount with an income below $75,000 for individuals and $150,000 for married couples filing jointly. For each $100 above these thresholds, the check amount is reduced by $5, so individuals with incomes above $99,000 and couples above $198,000 won't get stimulus funds.
The IRS will use your 2019 tax information to determine your income if you've filed for last year. So if your income was lower than in 2018, filing right away could boost the size of your stimulus payment. Conversely, if you made more in 2019 than in 2018, you may want to delay filing until after getting your stimulus money so you can maximize the amount you receive.
This only matters if your income was above the $75,000 or $150,000 thresholds in one of the years but not the other. If your income was always below this amount or has stayed steady, you don't have to worry about this.
You do want to make sure the IRS has updated bank info on file, though, so your stimulus payment can be directly deposited into the correct bank account. The IRS has indicated it will develop a web-based portal to update bank info but this may take time. Filing a 2019 return and providing your bank details could be the fastest way to ensure your money is sent to the right place.
3. You don't want to fall further behind
If you're among the minority of Americans not getting a refund and you owe taxes instead, it's tempting to take the extra time to file and pay them.
But taxes will continue to accrue on your earnings throughout this year, even as you wait to pay your 2019 taxes -- and you'll need money to pay those taxes too.
If you owe estimated taxes, there due date for your April and June payments have also been pushed back to July 15 -- but if you delay filing and paying until then, you'd have to pay last year's outstanding tax bill and two estimates for this year all at once. Paying so much to the IRS in such a short time, instead of spacing out your payments, could be a major financial strain.
Look at the big picture
If you can get a bigger refund or raise the size of your stimulus check, filing your taxes ASAP is definitely a good idea. And if you have the funds to pay your 2019 bill and don't think you'll need the cash for other things during the coronavirus crisis, filing and paying by April can ensure you don't end up with too big a tax bill to pay later. Just be sure to look at the big picture rather than simply defaulting to paying later just because the government will allow it.
