As this point, many of us are still adjusting to the fact that it's 2022 and aren't yet focused on IRS matters. But it may soon be time to start gathering your tax documents and calling up your accountant.
The IRS just announced that it will begin accepting 2021 tax returns on Jan. 24. And that's actually a good thing.
Last year, the IRS postponed the start of the tax-filing season to Feb. 12, whereas the agency normally allows filers to submit their returns in late January. Opening up the tax season sooner gives filers a chance to snag their refunds earlier on in the year. And for that reason alone, it may be worth getting your taxes done in January this year -- even though that's well ahead of the deadline.
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When are taxes actually due this year?
Normally, taxes are due on April 15 every year unless there's a reason to extend the deadline. In 2020, the IRS moved the filing deadline back several months to give taxpayers more time to tackle their returns while the pandemic raged. Otherwise, the IRS might delay the filing deadline by a couple of days in situations when April 15 falls out on a weekend.
This year, taxes are due on April 18, even though April 15 falls out on a Friday. The reason is that Emancipation Day, a Washington, D.C., holiday, falls on April 16 but is being moved to Friday, April 15. Since many government services are paused for Emancipation Day, filers get a touch more leeway to submit their returns on time this year.
To be clear, there's no penalty for submitting a tax return after the filing deadline when the IRS owes you money. But if you owe the IRS money, it's important to submit your return by the filing deadline to avoid costly penalties.
That said, even if you're confident you're owed a refund, it pays to file your taxes early for one big reason -- the sooner you do, the sooner you get your money. That may be a big motivator this year for filers who were entitled to stimulus checks in 2021 but didn't receive them.
Even if you received your stimulus funds, if you typically get money back from the IRS and your income didn't increase in 2021, you may want to get last year's taxes in early to expedite your refund. It normally takes the IRS about three weeks to process refunds for electronically filed returns, but last year, some filers saw their refunds held up due to the agency being overwhelmed.
If you're eager to submit your taxes early this year, start gathering important documentation now. And if you're not happy with how the numbers are shaking -- say, you're due a smaller refund than usual or you owe the IRS some money -- see if there's any way to eke out some last-minute tax savings. If you didn't max out your 2021 IRA, for example, you can still contribute to that retirement plan up until this year's tax-filing deadline. You also get until the filing deadline to sneak more money into last year's health savings account if you didn't already max out.
