Is There A Benefit To Filing And Paying Taxes Early?

Tax Season 2022

Taxpayers are encouraged to file their 2021 taxes now. Most taxpayers have until April 18 to file, but the Internal Revenue Service (IRS) has a long road ahead of it for widespread staffing shortages and a backlog of unprocessed paper returns stretching into the millions; refunds may take extra time to arrive.

Taxpayers should file on time, even if they can’t pay the full amount due,” says Daniel Ahart, chief tax officer at the tax preparation company Daniel Ahart Tax Service®

Don’t File Before You Are Ready

While taxpayers should not file late, they also should not file prematurely. People who file before they receive all the proper tax reporting documents risk making a mistake that may lead to processing delays.

Individuals Not Required To File Must File A Tax Return To Claim Important Tax Credits

The IRS strongly encourages individuals who are not required to file a tax return to file one this season to claim potentially thousands of dollars in tax credits. By filing a tax return, individuals could claim:

• The Recovery Rebate Credit to receive any remaining 2021 stimulus payments that they might not have received;
• The remaining Child Tax Credit for which they are eligible, including any monthly payments that they might not have received; and
• The Earned Income Tax Credit, the federal government’s largest refundable tax credit for low- to moderate-income families.

What Happens If You File Or Pay Your Taxes Late?

Two penalties may apply. One penalty is for filing late and the other is for paying late. They can add up fast. Interest accrues on top of penalties.

• Late-filing penalty. If taxpayers file their 2021 tax return more than 60 days late, the minimum penalty is usually $210. If the tax owed is less than $210, it’s 100 percent of the unpaid tax. Otherwise, the penalty can be as much as 5 percent of the unpaid tax each month up to a maximum of 25 percent. There’s no penalty for filing late, if the taxpayers is due a refund.
• Late-payment penalty. You’ll likely end up owing a late payment penalty of 0.5% per month, or fraction thereof, until the tax is paid. The maximum late payment penalty is 25% of the amount due. You’ll also likely owe interest on whatever amount you didn’t pay by the filing deadline.

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Get The Help You Need When You Are Ready To File

Daniel Ahart Tax Service® prepares all tax returns, helps solve tax problems, and prepares back taxes. 22 Area Locations in Georgia.

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