1. Avoid Identity Theft
Identity theft is scary and can take months or years to correct. The IRS estimates that more than $12 billion has been paid out to identity thieves in the last 5 years. While the IRS is working hard to protect taxpayers, you’ll lower your risk of theft by filing early. Victims often only find out that they’ve been targeted after a return has been rejected and the thief has already gotten the refund payment. The IRS only accepts one tax return for each Social Security Number, so filing yours early makes sure that others can’t attempt to do so. Monitoring your credit score is also essential to making sure none of your financial information has been stolen or compromised.
2. Planning Time for Payments
If you are amongst the 30% of Americans who will owe taxes when filing, it’s better to know your liability up front. Knowing your tax burden will allow you to formulate a plan for paying any bill that you may have incurred. You’ll be able to set aside savings, curb spending or pick up overtime in time to pay the bill without further penalties.
3. Faster Refunds
Typically, refunds are issued within about 3 weeks of your tax filing, but if you file early, there’s a good chance you’ll get that money back more quickly. This is especially helpful if you’ve been holding out on a major purchase and will be using your return cash to finance it. Because a return is money that you’ve already paid the government, there’s no reason to wait to get it back into your own pocket for spending or saving.
4. Avoid Errors
Working on your taxes early allows for plenty of time to correct any errors you might find in your documents. For example, if you have incorrect information on a W-2, you won’t be in a panic while trying to get it corrected. Making sure all of your documents are accurate greatly lessens your chance of having to file an amended return, and makes it less likely that you’ll get audited in the future.
5. Availability of Tax Preparers
If your taxes are complicated, you probably feel more comfortable having a tax preparer do your taxes, finding a tax preparer can be difficult if not impossible the closer we get to Tax Day. They’ll need time to go through all of your documentation, prepare forms and get them to you for approval and filing. Some tax professionals may even charge more as tax season gets closer to deadline. Getting an appointment in early can also eliminate the stress of the unknown when it comes to your tax liability.
There’s really no downside to filing your taxes early. Once you’re sure you have all of your documents organized and ready to go, it might be best to get it out of the way!