Chip Somodevilla/Getty Images
You should file your taxes immediately, despite a potential tax refund delay, according to accountants.
- Despite a potential tax refund delay in the event of a prolonged partial government shutdown, you should still file your taxes as soon as possible, accountants told Business Insider.
- Filing early will secure a spot for when refunds are issued, but those who typically use their refund for budgeting may need to plan further ahead.
- When filing taxes, American taxpayers should file electronically and request direct deposit.
Tax season got a little more challenging due to the partial government shutdown.
The Wall Street Journal's Richard Rubin reported this week that taxpayers who file early in the season may not receive their funds in a timely manner as the IRS is operating with about 12% of its employees.
But that doesn't mean taxpayers should delay filing their taxes, according to accountants.
"File early as you normally would and at least secure a place in line for when refunds will be issued. Don't wait until things get back to normal," Ed Slott, CPA and founder of IRAhelp.com, told Business Insider. "That would only further delay your refund."
Mike Savage, CPA and CEO of 1-800Accountant, had similar advice.
"It is still the best practice to file as soon as they can, but if they plan on receiving the refund at a specific time for budgeting purposes, they will need to plan further ahead in case the refund does not come through in time," Savage told Business Insider.
The IRS typically begins accepting tax returns at the end of January, and early filers can see refunds hit their account as early as February.
If the shutdown is resolved in a few weeks, it may not affect taxpayers, but the current situation increases the likelihood of a tax refund delay, particularly for those who need it most - low-income households.
This group typically files early in the season so they can use their refunds to pay off debt or bills or make big purchases, Rubin reported. They can also benefit from provisions that give them no income-tax liability, he said.
"Taxpayers with lower-income thresholds will most likely qualify for the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC)," Savage said. "In the past, refunds were delayed that claim these credits until February, but may be pushed even further back."
Floyd Williams, a former IRS director of legislative affairs, told Rubin that wealthier taxpayers typically file later and shouldn't be affected to such an extent.
The potential delay comes in a year when, under the new GOP tax law that went into effect in 2018, many taxpayers should be expecting bigger refunds than normal, particularly married filers with two children, according to an analysis by UBS.
Shutdown or no shutdown, you should be doing everything you can to prepare for tax season, including gathering personal information and last year's information, collecting paperwork for your dependents, tracking your income, noting any deductions, and having your financial information ready.
Once you're ready to file your taxes, the IRS recommends electronically filing and requesting direct deposit for your refund.
- Read more:
- Here's when you can expect your employer to send the form you need to file your taxes for 2018
- Tax Day is April 15. Here's what you can expect when filing under the new law
- Everything you should be doing to prepare for tax season
- You may be able to cut down your tax bill with a little-known credit if you saved for retirement this year