The start of the year marks the return of tax season, the stretch between January and April when you figure out how much in taxes you've paid—plus how much you might still owe or how much you can expect back from the IRS for the previous year. If you're expecting a refund, you might wonder, "How early can I file my taxes?" If you don't have money coming your way, you might instead want to know just how far back you can push this chore. Here's an overview of when you can file taxes and what to watch out for this time of year.
When can you start filing taxes?
The earliest you can file taxes is when the IRS opens its e-file system to accept electronic returns. Every year in early January, the IRS announces the first day you can submit. In 2024, that date is expected to be around January 18. Even though returns can't be entered into the IRS filing system until the designated date, some third-party preparers might accept returns earlier so they're ready to go when e-file opens.
If you're in a rush to file and potentially get a tax refund, it could be helpful to start gathering the necessary documents as soon as possible and note any changes to your financial situation from the previous year. But know that employers have until January 31 to send W-2s to employees and 1099s to contractors/freelancers, and you'll need those documents to prepare your return correctly. You may also need tax forms from your bank or brokerage firm. Typically, brokerages and banks provide you a 1099-B, which itemizes transactions from the last tax year. This is used to fill out Schedule D, noting gains and losses for the tax year. Brokerages and banks may also provide you a 1099-INT which lists types of income and interest. Tax forms from financial institutions may come later than those from your employer.
When are taxes due?
If you owe a payment, taxes are due in mid-April, the same deadline for filing your tax return. In most years, the tax payment deadline is April 15. If April 15 falls on a weekend or a holiday, the deadline moves to the next business days. For example, the deadline to pay 2022 taxes was April 18, 2023.
You likely already paid taxes during the year either by withholding a certain amount from each paycheck if you're an employee, or by sending payments to the IRS each quarter if you're a business owner or independent contractor. If you gave the IRS too much during the year, you get a refund. If you underpaid, you must send in the remaining balance with your return.
If you don't settle your tax bill by the mid-April deadline, you could be charged interest and a penalty on top of your unpaid balance. That penalty amount depends on whether you file your return on time.
- Failure to file: If you don't file your return and you owe taxes, the IRS charges a 5% per month failure-to-file penalty on your unpaid tax bill. The penalty maxes out at 25% of your total bill.
- Failure to pay: If you file your return but don't pay all your owed taxes, the IRS charges a smaller 0.5% per month failure-to-pay penalty on your unpaid tax bill. This penalty also maxes out at 25% of your outstanding bill.
- If you're charged both a failure-to-pay and a failure-to-file penalty in the same month, the most you have to pay each month is 5% total for both penalties. Don't forget about interest, either. You'll be on the hook for interest on unpaid taxes starting on the original due date until they are paid in full. The IRS updates its rate on a quarterly basis.
Advantages of filing your taxes early
Now that you know the rules for when you can file taxes, it's up to you to decide when to prepare them. While you may feel like procrastinating, there are benefits to filing your return early.
It could speed up receiving a potential tax refund
If you're expecting to get a tax refund, filing sooner means you're likely to get your money sooner. The IRS says it aims to process and pay refunds within 21 days of receiving a return through its e-file system. That means if you e-file in late January, you could get your refund in February. If you wait until the April tax deadline, you might not get your money until May.
Processing paper returns, on the other hand, takes the IRS 4 weeks or more.
You'll have your return for other financial needs
You might need to show your most recent tax return for major financial moves, such as taking out a mortgage or applying for financial aid if you're a student. Lenders could delay your application until they see your most recent tax return. By filing early, you'll have your documents ready to go.
It could lower the chance of tax fraud from identity theft
If the wrong person got hold of your Social Security number, they could try to file a fraudulent tax return under your name. Scammers send in a return with false numbers, asking for a big refund sent to their address. If you file early, you could narrow the window for thieves to submit a fake return and avoid the headache of re-establishing your identity after it's been stolen.
Things to keep in mind if you file your taxes early
Submit only when you're ready
You need the proper documents before you can file, such as a W-2 from your employer and 1099-B and 1099-INT from any financial institutions where you have accounts. It's best to submit your return once you're confident that you have all the information necessary to fill out an accurate return. If you file a return with a mistake, you'll have to file an amended return to fix it—and it could cost you. You might need a professional preparer, and you could owe the IRS penalty fees if you underpaid your taxes as a result of the mistake.
Watch out for tax law changes
Tax law is continuously evolving. In some years, the IRS hasn't locked in all the details of deductions and credits for the tax year by the time people are allowed to file. For example, in 2023, it recommended that people in more than 20 states wait until later in the tax season to file while they determined whether rebates given the previous year would be counted as taxable income.
Your tax advisor or tax-prep software could adjust your figures if you wind up in this situation.
Remember your IRA and HSA contributions
You have until the tax-filing deadline to contribute to an individual retirement account (IRA) and health savings account (HSA) for the previous year. If you haven't maxed out your IRA and HSA contributions for the tax year, it could be worth waiting to file. By delaying, you give yourself more time to contribute to those accounts and lower your taxable income by a greater amount.
What happens if you need more time to file taxes?
If you need more time to prepare your tax return, you may request a free extension through the IRS website. The extension gives you until mid-October to submit your return.
While those extra 6 months takes the pressure off tax prep, it doesn't give you more time to pay your tax bill. You still need to settle your total balance by the mid-April deadline. This takes some guesswork since you won't know exactly how much you'll owe until you complete your return. Pay what you think you'll owe based on your best estimate to avoid the IRS failure-to-pay penalty and interest. To play it safe, you could even aim to slightly overpay. Once you file, you'll get back any extra taxes as a refund.
For more help deciding the best time to file and how to prepare your return, consider speaking with a tax professional.