4 significant reasons for filing your taxes as soon as possible
The sooner you file your taxes, the faster you could see that stimulus cash.
The sooner you file your taxes, the faster you could see that stimulus cash.Sarah Tew/CNET
Sure, you have until April 15 to file your 2020 federal tax return, but we have four good reasons to file now -- beyond ridding yourself of the stress of having your taxes hanging over your head. Here's a hint: Your taxes play a helpful role this year, in addition to determining the size of your tax refund, if you get one. They're also a huge factor in calculating and receiving your stimulus check money.
Getting your taxes filed could be your ticket to finally receiving the first or second stimulus payment if you're one of the millions who qualified for a check but didn't receive all the money -- even if it was a clerical error or some other issue that caused your check to never arrive.
Some people had problems with custody and child support or missing money for child dependents in general. Others had funds accidentally garnished. Filing your taxes as soon as possible could help you claim missing stimulus payment money ASAP, regardless of why it wasn't delivered.
About 8 million nonfilers will also have to file a tax return this year to get their stimulus payment, but there are also benefits for the tens of millions of people who'll be eligible for a third stimulus payment of up to £1,400 per person -- a stimulus check that may arrive sooner than you think. By filing now, you could also set yourself up so you don't have to wait until 2022 to claim any additional stimulus money from check No.
3. We'll explain what you need to know.
4 benefits of filing your taxes early in 2021
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 one £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 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").
Now playing: Watch this: Stimulus check No.
3: What you need to know
Benefit 4: You'll stand a better chance of getting your full payment if, as seems likely, there's a new stimulus check 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.
So 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.
When your tax refund and missing stimulus check money could arrive depends on when you file
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 own (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.
When to expect your tax refund
|This is the soonest||This is the latest|
|Feb 19||Mar 5|
|Mar 8||Mar 22|
|Apr 8||Apr 22|
|Apr 22||May 6|
|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.)
How to find out if the IRS owes you money from a stimulus check
To figure out whether and how much money you're owed from a previous round of stimulus checks, first you 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 indicate 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 you 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.
If one of your previous stimulus checks was mistakenly reduced, you can claim the difference as a tax credit when you file this year.Angela Lang/CNET
Here's why the IRS could owe you money, to begin with
There are all kinds of reasons why the IRS might still owe you stimulus check money, including:
To claim your missing stimulus payment on your tax return, start here
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.
The fastest way to get your money is to file electronically and have the funds deposited in a bank account.Sarah Tew/CNET
Here's how you could receive your missing stimulus check money
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 find your adjusted gross income.