How Early Can You File Federal Tax Returns?
People anticipating a tax refund may wish to file their federal income taxes as early as possible. You can file as soon as you have all the necessary documents. For most people, this occurs by late January or early February. There are several ways to expedite your return or gain immediate access to your money.
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Documents
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Whether filing on your own with software or opting for professional preparation, you need to gather the appropriate documents before starting a federal tax return. You will need a copy of your tax return from the previous year, as most filing software asks for last year's adjusted gross income as an electronic signature. Those who were employed in the previous year will need W-2s from all employers. Most employers are required to distribute W-2s by January 31. You will also need any other relevant income forms, such as 1099s, as well as documentation for claiming deductions, such as receipts from charitable donations. (See References 1 & 2)
Expedited Filing
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Qualifying individuals and families are eligible to file their federal taxes at no cost via the Internal Revenue System's online Free File e-file option. With IRS Free File, you can prepare and submit your taxes entirely online, eliminating the need to mail documents, therefore, expediting your return. The IRS provides this free tax software with step-by-step filing instructions. To receive your return in even less time, you can opt to receive your payment as a direct deposit into a checking or savings account. If you have a total household income of $58,000 or less, you may qualify for the Free File service. (See Reference 3)
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Refund Anticipation Loans
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Some tax preparation services let you borrow against your anticipated tax refund. These institutions collect your financial information and give you a refund anticipation loan, or RAL, which you must repay with interest. There are also fees associated with this type of loan. In most cases, your refund goes directly into the lender's account. If your refund ends up being less than the amount of the loan due to withholdings for things like unpaid child support, you have to repay the balance. People who opt for RALs often end up losing 10 percent or more of their anticipated refund amount in fees and interest, according to the Wisconsin Department of Revenue. (See Reference 4)
Potential Delays
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Due to 2010 changes in tax laws, an estimated 50 million taxpayers will have to wait until later than normal to file in 2011. The delays primarily affect people who itemize deductions, such as charitable donations and other deductions filed on Form 1040 Schedule A. Other deductions affected include educator expenses, college tuition and local sales tax. People who wish to file with the affected deductions may have to wait until mid- to late-February, giving the IRS time to update its filing system. The IRS will announce when affected taxpayers can submit their returns. (See Reference 5)
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References
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