The IRS announced today that they will begin accepting e-filed returns (and begin processing paper returns), on January 30. This is about two weeks later than the mid-January time frame when the IRS typically begins processing returns. The delay is a result of the uncertainty surrounding the “fiscal cliff” negotiations that weren’t concluded until just after the New Year.
This delay will mean those in a rush to get their refunds may have to wait a few weeks longer than usual. Some filers, most notably those claiming Residential Energy Credits or depreciating property (typically rental or business property), may have to wait until early March before the IRS will begin processing their returns. (Although it could have been much worse, the IRS had previously announced that under certain scenarios, they might not have been ready to start processing any returns until March.)
Once again, this is just one more example of why I advise people to try to minimize their tax refunds as much as possible. While it’s tempting to get excited about a big refund check, the reality is that’s just money you could have been receiving during the previous year, rather than having to wait until the end of the year and file a return to get it.
The IRS provides a withholding calculator that can help you fill out your W-4 with your employer. Most people claim too few exemptions on this form, resulting in too much tax being withheld during the year. By claiming the right amount of exemptions, you’ll fatten every paycheck you receive throughout the year.
Of course, having fewer taxes deducted from each paycheck means a smaller refund (or possibly even owing a little bit) at the end of the year. But that just means not having to worry about rushing out to file your return to get your money as soon as possible. Wouldn’t you rather have your money now?