Amid the Pandemic, Procrastination Presents New Pitfalls
There are compelling reasons this year in particular not to put off filing your taxes to the last second, a UMD accounting expert says.
The IRS started accepting and processing tax returns on Feb. 12, officially kicking off tax season. That’s two weeks later than usual, giving the agency more time to create and test new systems for handling the second round of pandemic-related stimulus payments approved at the end of 2020.
But those returns still must be postmarked by the usual April 15, meaning you get less time to file. Maryland Smith accounting lecturer and CPA Samuel Handwerger recommends that you get them done now.
“If you file early, the IRS will send you a sticker that says, ‘Good American Taxpayer!’ Okay, maybe not,” said Handwerger, who is also the faculty adviser for TerpTax, the Robert H. Smith School of Business’ free, student-run tax preparation service. “But you should still not procrastinate.”
More than 150 million tax returns are expected to be filed this year, despite staffing shortages at the IRS during the pandemic and snafus in processing the first two rounds of stimulus payments through the CARES Act.
Amid all that, here are Handwerger’s four reasons that early filing is smart filing.
You avoid the hassle of being a victim of tax identity theft
A lot of fraudulent tax returns are filed every year using someone’s Social Security number to claim their refund. The IRS processes refund claims on a first-served basis. If someone uses your tax identity to file before you do, the processing of your return will be delayed while you work with the IRS to get the whole mess straightened out. “If you file first,” Handwerger said, “then this doesn’t become your problem.”
You get your refund sooner. “Three out of every four returns are due a refund,” Handwerger said. “That’s just math. Why not get the money sooner?”
You get more time to pay, and plan. If you do owe money to the IRS for 2020, you have until April 15 to pay to avoid penalties and interest charges. “Knowing what you have to pay sooner can help you budget,” he said. Plus, you’ll have a bit more time to consider taking advantage of tax-savings techniques, such as putting money into an Individual Retirement Account (IRA). The deadline to make that move and get the deduction for 2020 is also April 15, “and there are no extensions for that,” Handwerger said.
You get more time with your tax preparer. If your CPA is seeing your records for the first time on April 14, this isn’t great for you. “When tax preparers are in a rush, they might miss asking you pertinent information that could save you money,” Handwerger said. “Meet with your tax adviser early in the season while they’re still relatively calm.”
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