More taxpayers jump start their own economies by early filing
Taxpayers who will get refunds may be working out their own economic stimulus plans, by filing their taxes earlier than usual. The IRS reports that as of February 27th, the number of returns filed by the same day last year was up three percent... a modest increase. A quick check with a few practitioners in different parts of the country shows the filing season is playing out very differently, depending on who you ask.
- CPA Scott Heintzelman, a partner with McKonly & Asbury in Pennsylvania (and member of the AccountingWEB Bloggers Crew), says his firm has seen 15 to 20 percent more clients coming in early, compared to prior years.
- At the same time, Linda Mulley of HBLA of Irvine, California says that some of the CPAs in the firm have not noticed any difference, while others have seen a significant slowdown in regular clients coming in, due to the delay afforded to banks and brokers issuing 1099s.
- Cynthia Jeanquenat, an Enrolled Agent in Horizons Unlimited in Virginia Beach, Virginia, told Fox Business that by the second week of February, she'd already been flooded with early filers. "People are creatures of habit and tend to come in at the same time every year. But some of the folks who already are in I don't normally see until the middle or third week of March."
Not only are they filing early, but more and more of them are filing electronically to speed up the process. A survey by BIGresearch said that 53 percent of those asked reported that they filed electronically this year. And the IRS reports that the number of taxpayers requesting direct deposit – with or without electronic filing - is up by seven percent, as people want to get their money the fastest, cheapest way possible.
BIGresearch also reportedly found that nearly half (48 percent) of early filers say they will use the refunds to pay off debt, and another 40 percent say they will beef up their savings. Eleven percent say they will make a major purchase, and another 11 percent say they will use the money to fund vacations (the numbers don't add up to 100 percent because some respondents gave more than one planned use for the money).
The IRS says that the average refund this year is $2,869, which is larger than last year by about 9 percent. That is partly attributable to the availability of the recovery rebate credit and the first-time home buyer credit, plus the additional standard deduction for real estate taxes. Overall, the IRS expects to process more returns than it did in 2007, but fewer than in 2008. The statistics are skewed, they say, because in 2008, people who normally don't have to file, did so in order to get the economic stimulus rebate.