Although it may be your tradition to wait until the deadline — usually April 15, but actually April 18 in 2022 — there’s more than one valid reason for completing and filing your return well before this date.
Prevent identity theft
In one tax identity theft scheme, a thief uses another individual’s personal information to file a fraudulent tax return early in the filing season and claim a bogus refund. The real taxpayer discovers the fraud when he or she files a return and is rejected by the IRS because one with the same Social Security number has already been filed for the tax year.
While the taxpayer will prove his or her return is the legitimate one, tax identity theft can be a hassle to straighten out and significantly delay a refund. Filing early may be your best defense: If you file first, it will be the tax return filed by a potential thief will be rejected — not yours.
Get a potentially earlier refund
With the massive delays in the last years filing season, filing early may put yourself closer to the front of the line to receive your tax refund (assuming you qualify for one). The IRS website still indicates it expects to issue most refunds for the 2021 tax year within the usual 21 days, despite the massive pandemic-related backlog from 2020 filings and notices.
The time is typically shorter if you file electronically and receive a refund by direct deposit into a bank account. Direct deposit also avoids the possibility a refund check could be lost, stolen, returned to the IRS as undeliverable or caught in mail delays. (With the current backlog, we also recommend paying tax balances electronically.)
Look for your documents
To file your tax return, you need your Form W-2s (if you’re an employee) and Form 1099s (if you’ve worked as an independent contractor or “gig worker”). January 31 is the deadline for employers to issue 2021 Form W-2s to employees and, generally, for businesses to issue Form 1099s to recipients of any 2021 interest, dividend or reportable miscellaneous income payments (including those made to independent contractors).
If you haven’t received a W-2 or 1099 by February 1, first contact the entity and then can contact the IRS for assistance.
Need help?
If you have questions or would like an appointment to prepare your return, please contact us. We can help you ensure you file an accurate return that takes advantage of all the breaks available to you.
Sidebar: Should I wait to file this year?
As of this writing, some taxpayers may still be waiting to receive their 2020 federal income tax refunds. A few people (mostly on social media) have floated the idea of refusing to file their 2021 income taxes until they receive their refund. Is this a good idea?
No, it’s not. Failing to file your return will only lead to bigger headaches later — possibly even penalties and criminal prosecution. Plus, if you qualify for a 2021 refund, you may receive that money before your 2020 refund. But the only way to get it is to file!
If you have any questions about the content of this publication, or if you would like more information about HoganTaylor's Tax practice, please email Tony Otto, Tax Practice Lead, at jotto@hogantaylor.com. You may also contact Denise Felber, Tax Partner, at dfelber@hogantaylor.com
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.