Filing tax returns early can deter scammers

If you’re accustomed to filing your individual tax returns closer to the April deadline, it’s not a bad idea to reconsider your timing. Filing early could actually protect yourself from tax identity theft — and there are other benefits, too.

Late filers prone to scammers

In a tax identity theft scheme, a thief uses another person’s information to file a bogus tax return early in the filing season and claim a fraudulent refund.

The “real” taxpayer discovers the fraud when he or she files a return and is rejected because one with the same Social Security number has already been filed for the tax year. The taxpayer eventually should be able to prove that his or her return is legitimate, but it can be a slow, arduous process and can significantly delay a refund.

Filing early may be your best defense – that makes it more likely that the tax return filed by a potential thief will be rejected instead of yours.

The IRS will start processing individual income tax returns on January 24, but keep in mind that you can get your return prepared soon after you have all the required documents.

Your W-2s and 1099s

To file your tax return, you need your W-2s and 1099s. January 31 is the deadline for employers to issue 2021 W-2 forms to employees and, generally, for businesses to issue Form 1099s to recipients for any 2021 interest, dividend, or reportable miscellaneous income payments – including those made to independent contractors.

If you haven’t received a W-2 or 1099 by February 1, contact the entity that should have issued it. If that doesn’t work, contact the IRS for help.

Other benefits of filing early

In addition to protecting yourself from tax identity theft, another advantage of early filing is that you’ll get your refund sooner. The IRS expects most refunds to be issued within 21 days after the return is filed, although the IRS has experienced processing delays during the pandemic. Keep in mind that a refund can arrive faster if you file electronically and receive it by direct deposit into a bank account.

Direct deposit also avoids the possibility that a refund check could be lost, stolen, returned to the IRS as undeliverable, or caught in mail delays.

If you were eligible for an Economic Impact Payment (EIP) or advance Child Tax Credit (CTC) payments, and you didn’t receive them or you didn’t receive the full amount due, filing early will help you to receive the money sooner. In 2021, the third round of EIPs was paid by the federal government to eligible individuals to help mitigate the financial effects of COVID-19. Advance CTC payments were made monthly in 2021 to eligible families from July through December. EIP and CTC payments due that weren’t made to eligible taxpayers can be claimed on your 2021 return.

We can help

Our tax services team can help answer your questions about filing your returns. Reach out to me or any member of our tax team for help.

© 2022 KraftCPAs PLLC

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