Last year, when the coronavirus outbreak erupted, the IRS made the decision to push back the tax-filing deadline from April 15 to July 15, giving filers an extra three months to not only get their returns in order, but come up with any money they owed the IRS. Earlier this year, it seemed like the IRS was holding firm on the April 15 filing deadline for 2021. But just this week, the agency caved in and agreed to push the filing deadline back to May 17.
Part of the reason the IRS conceded to this longer time frame is that the $1.9 trillion coronavirus stimulus bill that was just signed into law included an exemption for $10,200 in unemployment income. Given the number of people who collected jobless benefits last year, tax preparers will need time to incorporate these new rules. And now, thankfully, they get an extra month to do so.
Just because you have more time to file your 2020 taxes doesn't mean that delaying your return is a good idea. In fact, getting your taxes done before the original April 15 deadline could work to your advantage.
Why it pays to get moving on your taxes
Some people who file their 2020 taxes will inevitably owe the IRS money. But each year, most filers end up walking away with a refund. If you're due a refund for 2020, the sooner you get your taxes in, the sooner you'll have that cash. That's money you can use to pay off debt, pad your savings, buy stocks for your portfolio, or purchase key essentials, like groceries and medication for your family.
In fact, the average tax refund for the week ended March 5, 2021 was $3,061 -- not a small amount of money. If you're owed a similar sum, waiting another two months to get it could mean putting off certain goals (like starting to invest) or digging yourself into more debt if you're already struggling to keep up with certain expenses.
Not only might you be entitled to a regular refund, but if you never received either your first-round or second-round stimulus payment last year, your only option for getting that money is to claim it on your 2020 taxes in the form of the Recovery Rebate Credit. While you can, of course, still claim that credit in May, do you really want to delay your payout any longer?
In fact, if you file your taxes electronically, you could see your refund arrive within three weeks, especially if you're signed up for direct deposit. And if you're owed stimulus funds, that refund could be huge.
Even if you're not expecting a giant refund this year, getting your taxes done gives you one more annoying task to cross off your list. And that alone is a good reason to tackle your taxes sooner rather than later.