The 2024 tax season is underway, but taxpayers have until April 15 to file their federal income tax returns this year. Some people file as soon as the IRS begins accepting returns, and others wait until Tax Day. So, which is better? Should you wait to file taxes, or should you file them early?
The answer depends on your individual tax situation, but here’s what you should know before you file your 2023 tax return.
Is it better to wait to file taxes?
Some people might need to wait to file the federal income tax returns. For example, you won’t want to file without all the necessary documentation. If you’re missing essential tax documents, filing now could result in an inaccurate tax return. And inaccuracies could result in a delayed refund — or worse — an IRS audit. Here are some common tax forms you might need before you file.
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- Form W-2 if you were an employee
- Form 1099-NEC if you received payments as an independent contractor
- Form 1099-INT if you received interest income
- Form 1098 if you paid mortgage interest or student loan interest
It’s important to note that you are required to report all taxable income, even if you don’t receive year-end tax documents. For example, online sellers might not receive a 1099-K form this year, but that income must still be reported to the IRS.
Some taxpayers may need to gather additional documentation before filing their taxes. This is necessary for taxpayers who are deducting business expenses and for people who choose to itemize deductions. (Most people take the standard deduction).
Filing taxes later also gives you more time to make HSA and IRA contributions. You have until April 15 to make contributions to your 2023 health savings account (HSA) and individual retirement account (IRA).
So, if you haven’t reached the 2023 contribution limits, waiting to file might be a good idea. Making additional contributions could go a long way in lowering your tax bill or increasing your refund amount.
Should you wait to file taxes due to the 2024 child tax credit?
Congress is still negotiating a $78 billion tax deal, which could result in a newly expanded child tax credit. If enacted, the credit could impact tax refund amounts for some families. However, IRS Commissioner Danny Werfel recently told reporters that taxpayers should not wait for Congress to decide to file their returns. Instead, Werfel says, taxpayers should “file when they’re ready.”
What if the new child tax credit is enacted after filing? The IRS says eligible taxpayers won’t miss out on a bigger refund if Congress passes an expanded child tax credit that is retroactive to the 2023 tax year. According to Werfel, the IRS will make any necessary changes to your tax return and “will send you the update — whether it’s an additional refund or otherwise — without you having to take additional steps.”
File taxes early for a faster refund
The IRS issues most tax refunds within 21 days of acceptance. So, typically, the earlier you file, the sooner you will receive your tax refund. As long as you’re ready to file, there’s no reason to wait, even if you expect to benefit from potential tax changes being negotiated by lawmakers. Here are the fastest ways to receive your tax refund in 2024:
- File as soon as you’re ready
- File a complete and accurate return
- Choose to receive your refund via direct deposit
Filing early can benefit taxpayers who expect to owe taxes, too. Regardless of when you file, tax payments are due by April 15 this year. So, knowing how much you owe early in the season can give you more time to plan for the payment or to set up a payment plan with the IRS.
If you do choose to wait to file your tax return this year, just make sure you do so (or file for an extension) by the April 15 tax deadline. Otherwise, you could face a failure-to-file penalty.
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