Americans are not messing around this tax season.
In just one week since the tax filing period opened on Feb. 12, the IRS received nearly 35 million individual tax returns, according to data released by the agency on Thursday.
The rush of returns far outpaces what the agency saw last year, even before the coronavirus pandemic hit and led to an extended filing window. In the week ending Jan. 31, 2020 — the first of the 2019 tax season — the IRS had received 15.7 million returns, it said.
Even by Feb. 7, 2020, the end of the second week of the 2019 filing season, the IRS had received nearly 29 million individual tax returns, less than they've received in just one week this year.
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There are a few reasons why Americans may be in a rush to file right now. First, the IRS pushed back the start of the filing to Feb. 12 so that it had time to prepare after sending out the second round of stimulus payments.
Since the agency has not extended the filing deadline of April 15 — and has said that it does not plan to do so — people have less time to get their paperwork and any payments they owe to the IRS.
Benefits of filing as soon as possible
Filing as soon as possible may have other benefits for Americans who were hit hardest by the coronavirus pandemic.
People may be racing to file in the hopes that they'll soon get a refund, which for many is the biggest windfall they see all year. The fastest way to get any refund you're owed is to file your taxes as soon as possible, said Elaine Maag, a principal research associate at the Urban-Brookings Tax Policy Center.
"There's no benefit to waiting," she said.
Filing a tax return is also the only way for Americans who didn't get stimulus checks they were eligible for, or didn't receive the correct amount, to receive the money.
If you had a drop in income in 2020 or had a child, you may be able for stimulus payments you didn' t qualify for based on 2019 earnings. You may also be able to claim tax credits meant to aid middle- and low-income Americans, such as the earned income tax credit and the child tax credit, which can be worth hundreds or thousands of dollars, depending on income and family size.
Filing a return is also one of the best ways to ensure the IRS has your current banking information and address, which could help you with any future stimulus payments, said Maag.
Filing early can protect against fraud
Filing as soon as possible can also help protect you from tax fraud, according Kelley Long, a certified financial planner, CPA and member of the American Institute of CPAs' Consumer Financial Education Advocates.
If someone has stolen your identity and files a tax return in your name to claim a refund, you will run into trouble when you submit your actual information, she said. Then, it's your responsibility to prove to the IRS that the return filed in your name was fraudulent and give them the correct information.
The agency will investigate, which will delay you getting the money you're owed.
"You don't want to worry about that extra step of proving that someone stole your identity," said Long.
Tax returns can be amended if need be
To be sure, as Congress continues to work on coronavirus relief, there could be additional changes to the tax code that would impact 2020 returns. But experts say that's not a reason to delay filing your tax information, or at least starting the process of filling out your return, as it's not clear when another package will become law.
For one, if you plan to work with a tax professional to file this year, they're likely slammed because of the shortened season, so it's best to reach out as soon as possible.
"I think it's more prudent this year to get everything situated," said Anjali Jariwala, CFP, CPA and founder of FIT Advisors in Torrance, California.
If legislation is passed that would change your return, you can always file an amended one later, she said.
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