Tax Day usually falls on April 15, and it's usually accompanied by a huge roster or promotions and freebies, including free sandwiches, cookies, and more.
But Tax Day 2020 will be like none that have come before it. There are likely to be few, if any, restaurant freebies and deals, thanks to social distancing protocol. And this year, the federal tax filing deadline has been postponed to July 15 to give taxpayers more time to cope with the coronavirus-related economic crisis. If you owe estimated quarterly tax payments, those deadlines have been extended too: Payments you were supposed to make on April 15 and June 15 can now be paid by July 15, without penalty.
While the three-month extension is nice, and it's human nature to procrastinate, there's good reason to file your taxes sooner than later. Among them: Doing your taxes now could mean getting your hands on $3,000 or so much quicker. Here's everything you need to know.
You'll Probably Get a Tax Refund
There's endless debate about whether it's good or bad to get a tax refund. Regardless of where you stand on the issue, most filers do in fact receive federal tax refunds. While no one enjoys doing their taxes, and it was nice to see Tax Day 2020 moved to July 15, every day that you delay filing your taxes also delays when your refund payment arrives.
The typical federal tax refund is about $3,000 — and who couldn't use that kind of money right about now?
Many people are taking advantage of the 90-day Tax Day postponement and delaying the prospect of doing their taxes anyway. According to the latest data from the IRS, the number of returns the agency has received and the number of refunds the IRS has paid are both down 5% or more compared to last year at this time.
Meanwhile, the average tax refund payment is up slightly. Through April 3, 2020, the overall average refund was $2,878, compared to $2,833 for the 2019 tax season. Direct deposit tax refunds are even bigger, averaging $3,030 so this year, compared to $2,961 a year ago.
The point is: Assuming you're getting a refund, it's best to file your taxes sooner than later — so that you can get your money from the IRS sooner than later as well.
It generally takes about three weeks for the IRS to process a tax return and issue a tax refund. If you're impatient to get your money (and who isn't?), you can track your payment using the IRS "Check My Refund Status" tool.
Your State Taxes Might Still Be Due Soon
While the IRS has moved the federal tax filing deadline to July 15, the agency has no control over when state returns are due. Most states have followed the IRS's lead and have shifted to a July 15 filing and payment deadline. But a few states aren't adopting the federal filing guidelines, adding to the chaos in what's already one of the most confusing tax seasons ever.
It can be difficult to get clear answers about which states have moved their tax-filing and payment deadlines. Even your state's Tax Commission or Department of Revenue website might have confusing and contradictory information. For example, Mississippi's website still lists a tax due date of April 15, 2020. Yet on March 23, Mississippi issued a proclamation stating that the deadline for filing and paying individual taxes (and for making estimated taxes) was being moved to May 15.
According to the Tax Foundation, a nonprofit that tracks everything related to taxes, every state with an income tax has made some change to its filing process this year to give taxpayers more time, and most have gone with a tax due date of July 15 or later. (Hawaii is being quirky and actually going with a July 20 tax deadline in 2020, though the state is nice enough to say that "individuals expecting refunds should file as soon as possible.") However, filers in three states — Mississippi, Virginia, and Idaho — are still required to file state returns (and make income tax payments, if needed) earlier than July 15.
Whereas Mississippi moved to a May 15 tax filing deadline, Idaho has shifted from April 15 to June 15. Virginia, meanwhile, has an individual income filing deadline of May 1, though the deadline for making tax payments is moved to June 1.
For information specific to your state, go to your local government website. If need be, take a look at the state's news releases or social media channels to double check the filing deadlines and requirements this year. You can also check out the comprehensive list of state tax filing guidelines from the AICPA, but be warned that the document was compiled for accountants and can be confusing.
Even if your state taxes aren't due for months, you may want to file soon for the same reason explained above with federal taxes: If you are getting a state tax refund this year, that payment is being delayed because you haven't filed yet.
Your Tax Return Could Affect Your Stimulus Check Amount
As we've explained previously, coronavirus stimulus check amounts are determined by your income as reported on your tax returns. If you haven't filed a return this season (for the 2019 tax year), then your stimulus payment will be based on your 2018 tax returns.
If your adjusted gross income on your most recent tax return was $75,000 or less, you'll get the biggest stimulus check payment possible: $1,200 per adult. On the other hand, you'll get no stimulus check whatsoever if you made over $99,000 according to your tax return.
So, if your income changed significantly from 2018 to 2019, there could be implications for how big your stimulus check will be, or even if you receive one at all. If your income dropped in 2019 below the $99,000 or $75,000 threshold, then you should absolutely file your taxes right away to ensure you get a stimulus check for the proper amount you're owed. (You should also provide your direct deposit info to the IRS when filing, which is the fastest way to get your stimulus payment.)
On the other hand, if your income rose above the $75,000 or $99,000 adjusted gross income threshold in 2019 and you haven't filed taxes yet, there's incentive to delay doing your taxes even further. Again, the payments are dictated by your most recent tax return. If you are eligible to receive a stimulus check based on your 2018 return but not your 2019 return, or if you'd get a larger stimulus payment based on your 2018 income, then you have reason to put off doing your taxes this year if you haven't already filed.
As the nonprofit Tax Policy Center explains, the IRS stimulus check computation system "gives some filers an opportunity to legally game the system to maximize their payment," and "you will not have to give back" the money, under any reasonable circumstances.