It's true, you have until April 15 to file your tax return, but filing sooner could be advantageous. Here's why you'll want to act quickly.
We get it -- filing a tax return isn't a walk in the park, and this year doesn't make it any easier with all the new tax rules brought about by the pandemic. However, filing a tax extension this year could cause you to lose out on some important benefits to filing your 2020 federal taxes before the April 15 deadline. You could receive your tax refund sooner, for example.
Filing your taxes early could also help you finally get any missing stimulus money you qualified for, whether it's due to clerical errors, issues with custody and child support, overlooked child dependents or funds that were mistakenly garnished. We'll also help you understand how your taxes play a huge role in the amount you could receive with the third stimulus check -- which is currently at $1,400 per eligible person -- and when you could get the money.
These tips apply to people who are considered nonfilers, too, and carry extra weight based on what could happen when a third check arrives during tax season 2020. Additionally, here's more information about all the benefits you could receive for child care and older adults and when it's time to contact the IRS or set up a payment trace if your stimulus payment doesn't show up. This story was recently updated.
Before we explain how you could benefit by filing taxes early, for some, filing a tax extension might be the better way to go.
Benefit 1: The earlier you file your taxes, the sooner you'll get your tax refund (you can estimate the total here). That's a great reason to file early every year.
Benefit 2: Since any missing stimulus check money is also tied to your tax return this time around, filing early will mean you get any missing stimulus money faster, too. If you're owed a tax refund and stimulus money, both will arrive as part of the same payment. For example, let's say your tax refund was $500 and your stimulus check allotment was $500. You'd receive a $1,000 payment from the US Treasury.
(If you're on the hook for taxes but you're owed stimulus check money, the amount you have to fork over will be reduced. So, if you were to owe $1,000 in taxes and you're missing $500 in stimulus check money, you'd only owe $500 instead of $1,000.)
Benefit 3: The chance to set up direct deposit with the IRS or fix any errors. People with direct deposit accounts on file with the IRS have typically received their stimulus payments faster than those getting money in the mail. We suspect the same will be true with the third stimulus check of up to $1,400 per person (read about why the new check might be "targeted").
Benefit 4: You'll stand a better chance of getting your full payment if, as seems likely, there's a new stimulus check approved in 2021. According to the latest proposal -- which is not law -- the IRS would base your third stimulus payment on your 2019 or 2020 taxes, whichever it has most recently on record. Any money you don't get as part of the automatic payment you'd have to claim a year from now on your 2021 taxes.
Let's say you made less money in 2020 than in 2019, or you had a new baby in the last year. If the IRS calculates your sum based on your 2019 life circumstances, you'd miss out on the rest of the check for a year or more, by the time it's processed.
Though you can still technically file your taxes by mail and request a paper check, the fastest way to get the money you're owed is to file electronically and have funds deposited directly into your bank account. This year, the IRS didn't begin processing tax returns until Feb. 12, making that the soonest you could have submitted your return (April 15 is the last day to file). The IRS says 90% of filers will receive their refunds in 21 days or sooner.
The IRS says its Where's My Refund tool will reflect the status of your refund within 24 hours of filing, which could include a confirmation that your refund has been issued. From there, it could take anywhere from one to three days for the money to appear in your bank account.
|If you file on this date||This is the soonest||This is the latest|
|Feb. 12||Feb. 19||March 5|
|March 1||March 8||March 22|
|April 1||April 8||April 22|
|April 15 (last day to file)||April 22||May 6|
|Oct. 15 (last day with extension)||Oct. 22||Nov. 5|
Assuming seven days is the soonest you'd get your combined tax refund-stimulus payment and 21 days is the longest, we've sketched out what a difference filing sooner rather than later could make. (There's more below on how to calculate how much money you might get in addition to your tax refund.)
To figure out whether and how much money you're owed from a previous round of stimulus checks, you first have to determine how much you were owed for each previous payment, then subtract from that any amount you already received.
Here's how to calculate the payments you were owed:
Next, you'll want to check your bank account where your payments were deposited to determine the amount you received. (If you received an EIP card, you can check the balance and transaction history here.) The IRS should've sent you a letter within 15 days of issuing your stimulus check, however it was issued, and that letter should show how much money you received. (Here's what to do if you didn't get the IRS notice.)
If you no longer have that letter, you can use the IRS' Get My Payment tool to help figure out when you received the payment. It'll also show you the last four digits of the bank account it was deposited in if it was deposited directly.
There's also a form to help you figure out the amount you're owed on page 59 of this PDF detailing instructions for 1040 and 1040-SR tax forms, but it's a doozy to follow.
There are many reasons why the IRS might still owe you stimulus check money, including:
The IRS requires you to fill out either form 1040 or 1040-SR if you're going to claim a Recovery Rebate Credit on your 2020 taxes. Once you have the amount you're owed worked out, you'll enter it on line 30 of either of those forms. Yes, it's that simple.
If you're due a refund from the IRS, it'll include both your full refund amount and whatever you're owed from the Recovery Rebate Credit. In other words, it'll be bigger. If, however, you owe the IRS money, your Recovery Rebate Credit will be applied to the debt. If the tax credit is more than you owe, you'll receive the difference as a refund.
Here's what to do if you're a nonfiler, i.e. you won't be filing taxes for 2020, and you're still owed a stimulus check. If you have child dependents, this information about the child tax credit could help put more money in your pocket. And here's how to calculate your adjusted gross income.