With 2020 finally in the rearview mirror, you’re ready to start fresh. Not all obligations attached to 2020 are out of the way, however.
Your dreaded tax return awaits, as does an important decision: get it out of the way now, or wait to see how the tax situation develops during the early months of 2021? As you choose your preferred timing, keep these considerations in mind.
Quick Refunds Are Not Guaranteed for 2020 Returns
Under ordinary circumstances, the main advantage of filing an early tax return involves an equally early refund. When you’re dealing with budget constraints, that swift refund can make a huge difference. It’s especially compelling during the economic difficulties of COVID — but the pandemic also means that a prompt refund can’t be guaranteed.
Unfortunately, the IRS is in the midst of a major backlog, with some people still waiting on refunds after filing 2019 tax returns. As the IRS gets caught up, there’s no guarantee you’ll receive your 2020 refund quickly. Still, some people prefer to get a head start under the assumption that submitting a return later could prompt even worse delays.
Extra Time For Paying Owed Taxes
If you don’t anticipate a refund, early filing might seem like a waste of time. In reality, however, this approach gives you an advance look at your tax obligations for 2020, as well as several months to plan so that you’re able to pay on time. Given the economic volatility of the pandemic, it’s probably better to get a sense of your tax situation early on so you don’t suffer any surprises as major tax deadlines approach.
As you determine the best timing for filing your 2020 tax return, feel free to seek guidance from the Highland Tax Group. We can help you with every aspect of completing and submitting your tax return, so don’t hesitate to reach out.