The IRS will start accepting tax returns for the 2020 tax year on February 12, 2021. This is a little bit later than normal, as the agency usually opens the filing season at the end of January. But it's still well before the ultimate deadline for filing taxes. In fact, you have until April 15 to submit your returns for 2020.
With such a long time in which to file, taxpayers have a choice to make: Should you file your returns as early as possible to get it over with or put it off until closer to April 15? The reality is, there are pros and cons to either approach and the right option will depend on your situation.
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These are the biggest benefits to filing taxes early
There are some huge advantages to submitting your tax returns as soon as possible. Here's what they are:
- You can get your refund sooner: The sooner you send in your paperwork, the faster your refund will come. If you e-file your returns and request your refund be delivered via direct deposit, you can get the money within 21 days of sending in your paperwork. When the IRS is holding your money, there's little reason to delay in claiming it.
- You can protect against identity theft: If you submit your tax forms ASAP, the IRS will process your legitimate return. If crooks steal your identity and try to send in forms with your details, they'll be rejected and efforts to improperly claim a refund using your Social Security number will be thwarted.
- You'll have time to deal with problems: If it turns out you're missing any forms you need when you sit down to do your taxes, you won't be scrambling at the last minute to try to find them and get your return in on time.
However, there are also some downsides. If you owe money to the IRS, you may not want to submit your returns until you're ready to pay it -- and waiting gives you more time. And if you send in your forms early, you don't provide as much time for late paperwork or corrected forms to come in. If you end up getting documents in the mail late in the filing season, you might have to submit amended returns.
These are the biggest benefits to waiting
There are also some advantages to waiting. Here are some of the biggest benefits of delay:
- You'll have time for late or corrected forms to come in: There are deadlines designed to ensure that you receive all your essential tax forms in time to complete your returns. But sometimes companies still send out documents late, or they need to make corrections and mail you new forms. This is more likely to happen if you get a lot of complicated tax paperwork. But if you do receive a late or modified form and you've already filed, you could be forced to amend your tax returns.
- You'll have more time to get your paperwork done: Filing taxes can be a burden. Some people prefer to take their time and complete the process slowly rather than rush to get it done.
- You'll have more time to raise money to pay your bill: If you'll owe the IRS and you want to pay your taxes when you file, you may prefer to wait until close to the deadline to submit your returns.
Of course, there are also downsides to waiting. You may end up with a big problem at the last minute if you sit down to file and find out you don't have all the information you need. Or, if it turns out it takes longer than you anticipated to submit your returns, you could end up being tardy and owing late filing penalties.
Should you file taxes early or wait? It depends on your needs
With both pros and cons to filing either early or late, consider what makes sense for you. If you need your refund ASAP and don't have a complicated tax situation, submitting your returns right away is probably the best course of action. But if you suspect that information may come in late or you have to pay your taxes and want more time, it doesn't hurt to wait -- as long as you get your forms in and your taxes paid by April 15.
