CLEVELAND — It's a day many of us dread, the start of tax filing season.
The IRS expects more than 160 million individual tax returns to be filed and because of Emancipation Day in Washington, DC, the filing deadline is April 18 this year.
But experts say you probably shouldn't wait that long. While it seems we’re back to a normal filing season, the IRS remains understaffed because of the pandemic and still faces an overload of backlogs.
According to Ben Grosko with Integrated Wealth Management, about 25% of Americans file taxes at the last minute. However, if you file early, you tend to get your refund quicker. Last year the average refund was $2,775, which is an 11.2% increase from the previous year,
If you owe, which may be the case for some people who got those advance child tax credit payments. you'll technically have more time to figure out how to pay by the deadline.
“If you do owe money and if you do file earlier, guess what? They want that money back if they did overpay you,” said Grosko.
Getting that return in early can also help prevent identity theft.
“A lot of folks are actually taking our Social Security number and filing our tax return on our behalf,” Grosko explained. “So, if they do that, they get your refund then guess what? Now you've got to fight for that money back and it causes all kinds of problems.”
Grosko added rushing to file usually causes people to make simple mistakes, which could mean penalties or even audits. Moreover, if you wait too long, you may end up paying more for tax services.
“They end up charging more because they've got to rush it. So, filing early will help and save you some money as well.”
Keep in mind, the IRS will charge you a penalty of 5% of unpaid taxes for each month your return is late; up to 25% of your unpaid taxes. The agency does offer payment plans to qualified taxpayers. Grosko urges the application process is easier when filing early.
For city taxes, the Regional Income Tax Agency (RITA) starts accepting electronic municipal tax filing submissions Monday, January 24. Be sure to check with your city to see if it participates or has a separate filing system.