Reports that recalled—and unpaid—Internal Revenue Service workers are being granted hardship leaves suggest that tax-time staffing will be lower than normal, and you could wait longer for your refund, despite IRS assurances. Typically, the wait for a federal tax refund is less than 21 calendar days from when the IRS accepts your return.
The IRS won't comment on the staffing situation, but says it's still getting ready for the filing season that starts on January 28. "We are continuing our recall operations, and we continue to assess the situation at this time," the agency told Consumer Reports on Wednesday.
The government shutdown notwithstanding, experts agree that you should prepare and file your state and federal returns electronically and arrange for direct deposit of your refunds. Electronic filings ensures quicker processing, and less likelihood of a human data-entry error that could delay your refunds.
And it's still a good idea to file your 2018 federal and state returns as soon as possible. Here's why:
Receive Your State Refund Quickly
Regardless of the speed at which a stripped-down IRS staff is able to process returns, state taxing authorities are prepared as usual to process state income tax returns and to issue refunds.
"The timing of state refunds varies for each state," says Alison Flores, principal tax research analyst at The Tax Institute at H&R Block. "However, the states don't require the IRS to issue a refund first."
But to have your state return processed, you typically must first file your federal return. When you file electronically, the IRS's system acknowledges receipt of your state tax return and then passes it to your state for processing.
"Even if the IRS did not have the capability of processing the returns it received, it would not affect the state processing in any way," says Verenda Smith, deputy director of the Federation of Tax Administrators, the association of tax agencies in the 50 states, as well as Washington, D.C., New York City, and Philadelphia.
Protect Yourself From Identity Theft
In recent years, the IRS has recommended filing your taxes as early as possible so that if crooks get hold of your Social Security number, they won't be able to use it to file a phony tax return and claim your refund—you'll already have done that. That admonition still holds, though for slightly different reasons than in the past.
Identity theft on tax returns has dropped significantly since 2015, as state and federal tax authorities and tax-prep companies have added processes to improve security, the IRS says. "These protections are especially helpful if criminals only have names, addresses and Social Security numbers," the IRS says.
"However," the agency adds, "there are continuing concerns that cybercriminals will try to build on this basic information by trying to obtain more specific financial details from taxpayers and tax professionals to help them file fraudulent tax returns."
What's more, there's no telling what cybercriminals might do with purloined information from massive data breaches last year.
Bottom line, as a security measure, it doesn't hurt to file soon, Flores says.
"The risk of tax fraud is reduced from what it was a few years ago, but there is still a risk," she says. "It's still a good idea to file your tax return once you have all your tax documents and can gather the information you need to file your return together."
Get an Advance on Your Federal Refund
If you can't wait for your federal refund, you can get an advance on it. Several tax-preparation companies are offering them this year. These loans don't charge interest or fees, but they're not completely without strings.
To get the refund advance, you'll first have to prepare and file your federal and state returns electronically with the tax-prep company.
For households claiming the Earned Income Tax Credit, a tax refund advance may be the best recourse for getting their money early; the IRS says EITC recipients should not expect their refunds until Feb. 27 at the earliest because their returns go through an extra fraud screening.
(You can track when your federal refund will arrive at "Where's My Refund?" on the IRS website. The agency is maintaining the page during the shutdown.)
Buy Time to Research Payment Options
If you owe money to the IRS, it's still a good idea to prepare and file your tax return early, though you don't have to make the payment until the tax deadline.
Knowing the amount you owe before the deadline gives you more time to plan how you'll pay. You can pay by credit card, but you'll get hit with a service fee of as much as 1.99 percent of your tax liability. If you pay by debit card, you'll owe a flat fee, which ranges from $2.58 to $3.95.
On the IRS website, you can find the agency's list of accepted services that process tax payments by credit or debit card.
