5 Reasons You Should File 2020 Taxes Now (and Not Wait)

A mom uses TaxSlayer to file her tax return online

The federal tax filing deadline was extended until May 17, 2021, which gives taxpayers an additional month to file and pay income taxes. The IRS is still encouraging people to file as soon as possible, especially those who are owed a tax refund.    

There may be circumstances that require you to wait and file your 2020 tax return closer to the May deadline. But here are five reasons why you should file earlier if you can.  

At a glance: 

  • The sooner you file, the sooner you’ll get your tax refund
  • If you were eligible for stimulus 1 or 2 but never received a payment, file your 2020 return to claim the Recovery Rebate Credit. 
  • The third stimulus is based on your most recently processed return (2019 or 2020). 
  • Filing now gives you the chance to update or provide direct deposit info – for your refund and your stimulus check if you are expecting one. 
  • It’s one less thing you’ll have to do later. If you owe, you can schedule your payment closer to the due date. 

1. Get your refund ASAP   

The IRS is urging people who are owed a federal tax refund to file as soon as possible. They also encourage everyone to file electronically, because filing your tax return online and choosing direct deposit is the fastest way to get your refund. A tax refund really is your money. There’s no reason to wait to collect what you deserve.   

2. Claim the Recovery Rebate Credit 

If you were eligible but did not receive one or both of the first two stimulus payments, you can claim a new tax break called the Recovery Rebate Credit on your 2020 tax return. This is especially important if you experienced a life change since the first round of stimulus payments were issued. Based on the information you provide, TaxSlayer will figure the correct stimulus amount you are owed, and it will be added to your tax refund (or subtracted from your tax bill if you have one).  

3. Get the stimulus payment you deserve  

Did anything change for you or your family in 2020? Your stimulus check could be impacted by simple things – like switching bank accounts – or bigger things – like a sudden change in income. 

For instance, if you earned less in 2020 than in 2019, make sure the IRS knows about it, because the third stimulus phases out completely for singles earning $80,000 and couples earning $160,000. Single filers earning less than $75,000 will get the $1,400 payment. Couples earning less than $150,000 will get $2,800.  

If you had a baby or adopted a child in 2020, make sure the IRS knows about your growing family. It will mean an additional $1,400 per dependent gets added to your third stimulus check. 

The government is issuing the third round of stimulus payments now. It’s important to give them all the information they need, so you can get every dollar you’re eligible for. 

Do I need to report the third stimulus on my 2020 taxes?  

No. When you file your 2020 tax return with TaxSlayer, you will be asked to enter information about the first and second payments only. If you receive the third check, be sure to take note of how much you receive, so you’ll have it when you file your taxes next year. 

4. Update your payment info to direct deposit  

According to the IRS, “Filing electronically with direct deposit is the quickest way to get refunds…”  

It’s true – getting a check mailed to you takes several days. But with direct deposit, your money is transferred from the Department of Treasury right into your checking or savings account. You can even split your refund and have it deposited into different accounts for added convenience. 

If you’re getting a stimulus check, it will likely be delivered the same way you get your tax refund – either by direct deposit or by mail. The government will send the stimulus payment to the account on your most recently processed return, 2019 or 2020.*  

*To provide updated bank account information for direct deposit without filing a return, use the Get My Payment tool on the IRS website. 

What if I don’t have a bank account?  

No problem. You can choose how you would like to receive your tax refund from the options here. As for your stimulus payment, the US Treasury will mail a paper check to the address provided on your tax return.   

5. File now and pay later  

Some people wait to do their taxes because they have a tax bill. But filing your tax return does not mean you have to send your payment at the same time. You can file your tax return and schedule your payment closer to the May 17 deadline, without penalties or interest.

Please note: The IRS is currently updating its system to allow taxpayers to schedule payments in May. For this reason, the option is not immediately available to tax filers but will be soon.

Whether you have a tax bill or a tax refund, the government wants to see how much your AGI is so they know who to send a stimulus payment. Use TaxSlayer’s refund calculator to find out if you can expect a refund or a tax bill. 

If you have the time, go ahead and cross taxes off your to-do list now.