|Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance.|
Why You Should File Your Taxes Sooner Rather Than Later
By Britt Erica Tunick
April 15th is right around the corner, and with it the traditional deadline for filing federal tax returns. However, as with so many other things over the past 12 months, that is not the case this year. For the second year in a row, the Internal Revenue Service has extended the deadline for filing tax returns so as to give people more time amidst the many ongoing challenges and unique circumstances related to the COVID-19 pandemic. While you may have more time to file your returns if you have not yet done so, getting them done sooner is still your best bet for multiple reasons.
The federal filing deadline for individual income tax returns for the 2020 calendar year has been extended to May 17, 2021. For taxpayers residing in Texas, Oklahoma, or Louisiana, where winter storm disasters occurred, the federal filing deadline has been extended to June 15, 2021.
Though many non-disaster states have followed the IRS’s lead, and extended their own filing deadlines for tax returns to May 17, that isn’t the case across the board. Depending on where you live, you may still have to file your state income tax return by April 15. Given the reality that most states use federal adjusted gross income as the jumping-off point for determining state tax liability, filing timely state tax returns will essentially necessitate filing federal taxes by the traditional deadline anyway.
Individuals living in Iowa have until June, 1, 2021 to file their state taxes, those in Oklahoma and Louisiana have until June 15 for both federal and state returns because of the recent storm disasters; Maryland has extended their filing deadline to July 15; and Arizona has an extension bill pending. Hawaii is keeping their April 20, 2021 filing due date. Other states, such as California, have allowed an automatic filing extension deadline to October 15, but payments must still be made by May 17. Be sure to check with your state, as some states are still making due-date changes as of this article’s publication time.
Beyond differing deadlines, another reason to file your taxes sooner rather than later is because waiting longer increases the likelihood that you can become the victim of tax identity theft. Tax identity theft occurs when someone obtains your social security number, files a phony tax return on your behalf in order to generate a refund, and then steals the refund money by routing it to a bank account they have created for this very purpose. Filing your return sooner reduces the chances of falling victim to tax identity theft and tax return refund fraud.