Every year, many taxpayers wait until the last minute to file their federal income tax returns. Despite this tendency, there are many reasons to file your taxes early. If you will receive a refund, you may want to submit your return as quickly as possible. Additionally, there are benefits to filing early for those taxpayers who have a balance due.
TABLE OF CONTENTSWhen you file your taxes early, this means that you’re filing your tax return well in advance of the mid-April filing deadline. Since the IRS typically begins accepting tax returns in January, early tax filing can mean that you’re filing your taxes any time between early January and late March.
Once April rolls around, the filing deadline is just around the corner and you won’t have much time to prepare your tax return.
Although the exact date that tax filing season begins varies from year to year, it generally falls around mid- to late January. Refer to the IRS website to find out the exact date that tax filing season begins for the upcoming year.
Keep in mind that, while you can technically file a return on the first day of tax filing season, other factors may complicate this timeline.
For example, January 31 is the deadline for businesses to issue Form W-2 and Form 1099 to employees and contractors. If your employer waits until the deadline to issue these key forms or other types of documentation, then you may not be able to file a return in the very first days of tax season.
In addition to relieving some of the stress associated with last-minute tax filing, there are some very good reasons to file your taxes earlier rather than later.
One of the most common reasons to file taxes early is to receive a faster tax refund. Filing your return electronically with direct deposit into your bank account is the fastest way to get your refund.
The IRS is scheduled to begin accepting e-filed returns this year on January 23.
If you owe a balance due to the IRS, you may still have a good reason to file your tax return as soon as you can. If you submit your return in the middle of January, you do not have to pay taxes you owe until the filing deadline. Preparing your Form 1040 early will give you time to arrange your payment. This extra time is particularly helpful to taxpayers who need to find out exactly how much they will owe the IRS.
Filing early helps prevent someone else from filing your tax return before you do and pocketing your tax refund–one of the most common ways criminals file a fraudulent tax return.
If you are expecting a big life change such as purchasing a house or returning to college, preparing your tax return early can help you obtain essential information. College students use the information from Form 1040 to apply for financial aid, while prospective homebuyers often have to show their completed tax return as proof of their household income. Getting your tax return done early—whether you owe money or expect a refund—gives you a head start on the paperwork you will need for these processes.
Filing your tax return early may help eliminate the need to file an extension. Extensions of time are often required as a result of disorganization more than financial need. Some people who wait until the last minute to file their returns simply need time to look for additional deductions or gather receipts.
Once someone gets access to your Social Security number, they have everything necessary to file a tax return in your name. The purpose of a fraudulent tax return is, obviously, not to pay your back taxes, but to pocket your tax refund. This scam occurs early in the tax season, well before most taxpayers file. Take every possible precaution to keep your SSN secret, and if possible, file your taxes early before someone else does.
There are a lot of benefits that come with filing your taxes early.
Filing early allows you to get your tax refund more quickly, gives you more time to prepare payment for any taxes you owe, and can provide you with important financial information, among other benefits. Plus, filing your taxes early and getting the process over with can alleviate some stress and make it so that you’re not rushing to get your tax return in at the last minute.
At the same time, there are valid reasons why you can’t or might not want to file your taxes early. In some cases, you may be waiting to receive forms or documents that are crucial to filing your taxes.
You may have an extremely busy schedule or events in your personal life that prevent you from filing your taxes early. Ultimately, whether or not it’s “better” to file your taxes early depends on your unique circumstances and preferences.
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