It's that time of year again — tax season! With so much going on in our everyday lives, filing taxes might be the last thing on your mind. Or maybe it’s been hanging over your head and you’re procrastinating on getting it done. But there are actually some great perks to finishing your taxes early and making sure you get it right the first time around. Here are five reasons why you should dive into those forms sooner rather than later.
Get your refund faster
Filing your taxes early has many advantages – perhaps most notably not having to wait as long to receive your tax refund. Who doesn’t want that money back in their pocket quickly? Filing at the beginning of tax season will put you first in line to have your tax return processed, which will increase the odds your refund is issued before most other filers. To speed up the process, file your taxes electronically (paper returns can take several weeks longer than e-filing) and register for direct deposit.
Find out what you owe sooner
It can be extremely helpful to find out how much you owe in taxes early on so you have time to obtain those funds. Knowing as soon as possible if you have an outstanding balance gives you time to plan and save so you can take care of it. It also provides more time to prepare any necessary financial contingency plans in case there's a problem with your return or if you need additional funds to cover payments. Waiting until the last minute can make the process much more stressful, so filing early is definitely a wise choice.
Avoid getting scammed
Another reason to file your tax return early is to reduce the likelihood of tax fraud. One popular scam occurs when fraudsters get ahold of a social security number and use it to file a fake return so they can pocket the refund. If you’ve already filed your tax return, you’ll beat any potential scammers to the punch. In fact, they’ll be unable to re-file it to steal your refund because the IRS flags multiple submissions using the same SSN. Likewise, however, if an identity thief uses your SSN before you do to file a tax return on your behalf, it will be a challenge to unravel this and get your money back.
Eliminate the need to file an extension
By submitting your tax return in a timely manner, you can also save yourself from having to file a tax extension. A tax extension gives you an extra six months to file your annual return, but it may also incur additional fees (for example, if you request an extension but don't pay your balance at that time, the IRS will potentially charge you interest and penalties until the outstanding tax debt is paid in full). Being proactive and filing earlier can help you avoid this extra cost.
Steer clear of the stress
Finally, filing your taxes early can reduce unnecessary stress and last-minute scrambling. As Tax Day approaches, many taxpayers struggle with increasingly slow tax websites, long lines at the post office, and the challenge of trying to find an available appointment with a tax professional or getting through to them with questions on the phone. Submitting your tax return sooner can prevent a lot of anxiety. In addition, taking care of paperwork earlier in the year ensures you have plenty of time to get all your affairs in order and that everything is done correctly before you have to file.