Though taxes aren't due this year until April 15, the IRS recently announced that it will begin accepting 2020 returns starting Feb. 12. Many people procrastinate on their taxes each year, whether because life gets in the way or they simply don't enjoy the process -- and really, who does? But here are a few good reasons why it's a good idea to file your taxes early this year in particular.
1. You'll get your refund sooner
Millions of Americans lost their jobs in the course of the coronavirus pandemic, while many suffered income loss. If you're in a tight financial spot these days, the sooner you file your tax return, the sooner you can expect your refund to come in -- and that could spell the difference between covering your expenses and racking up debt just to stay afloat. If you file your tax return electronically, you'll generally get your refund within 21 days. Refunds for paper returns, however, can take twice as long. Delays might be especially likely this year, what with many IRS employees working from home due to the pandemic.
2. It may be your only way to get your stimulus cash
In late December, lawmakers approved a second $600 stimulus check to follow the $1,200 payments Americans received under the CARES Act earlier in the year. If you didn't get your stimulus cash already, your only option for collecting it might be to claim it as a credit -- specifically, the Recovery Rebate Credit -- on your tax return. Of course, keep in mind that if you owe the IRS $600 or more due to underpaying your 2020 taxes, you won't get that $600. But otherwise, it's your chance to finally get that money.
3. You'll give yourself more time to come up with the money you owe
Though most people who file a tax return wind up getting money back from the IRS, it's possible that you'll owe money from not having paid enough tax in 2020. If that's the case, now may not be an easy time for you to write a check, especially if you've been hurt by the pandemic and money is tight. The good thing about filing your taxes early is that you don't have to pay your tax bill at the same time. Rather, you can wait until the actual April 15 filing deadline to submit that payment. This means that if you get your return done sooner, you'll give yourself more time to come up with a plan to make good on that tax debt before you start accruing interest and penalties on the sum you owe.
Of course, the IRS is always willing to work with people who can't pay their tax bills in full. You can sign up for an installment agreement, for example, and pay the IRS over time. Under that arrangement, you'll still be liable for interest and penalties, whereas if you can manage to come up with the money by April 15, you'll avoid those consequences.
Right now, many of us have a lot on our minds -- a pandemic, a shaky economy, and a stock market bubble that's threatening to burst, to name a few. Despite that chaos, it still pays to knock out your tax return ahead of the filing deadline. Doing so could help you financially and give you one less thing to stress over.