Completing your tax return is something that most of us want to put off until the last possible moment. That might not be the best financial move that we can make. There are several reasons that we should actually start early on our tax return. With the IRS starting to accept returns this Friday, February 12th, now is the time to act.
What is the number one reason for filing taxes early?
If you are getting a refund it doesn’t make sense to wait, file as early as possible because you will get your refund quicker and have the money longer. It is your money after all, so why wait? It is giving the government an interest free loan for everyday that you delay.
Should you complete your taxes return early if you know you are going to owe taxes?
Yes because filing early and making your tax payment are mutually exclusive. You can file your return and then wait until April 15th to actually make your payment. This allows you time to find the money to make the payment if you don’t have it and also have the comfort of knowing your taxes have been completed.
I have heard of fraudulent tax returns being filed, how does filing early prevent this?
If you file early, you eliminate the possibility of your tax return being filed fraudulently as only one return can be filed per social security number. The sooner you file your return, the less likely your information will be used to file a fraudulent return. Also, starting this year you can voluntarily opt into the IRS security program called IP PIN.
If you have a more complicated return could there be advantages to filing early?
If you have a unique tax situations starting early allows you to determine all of the information you need and have time to find that information. Also, if you are working with a tax advisor or accountant, they will have more time to work on your return. If you wait, there is more chances of making mistakes.
Are there any other benefits to filing early?
If you need to make any tax changes such as withholdings from your paycheck or starting to pay estimated taxes because of your side gig business, you will have more time to get those changes completed. Most importantly though, completing your taxes is usually a relief because people generally don’t know if they will owe or get a refund. Knowing this might be a cause for euphoria especially if getting a larger than expected refund.