Though tax season officially starts on January 27th, 2020, many people push off filing until March or April. If you find that you're one of those people who always wait until the last minute to file your taxes, you can save yourself some stress by filing early this year. Read on to learn more about the benefits of filing your taxes early.
Get Your Return Sooner
While filing your taxes is less than fun, getting that tax return check in the mail can make it all worth it. If you expect to receive a tax return this year, make it a goal to get that money into your hands as soon as you can. Filing your taxes early can help you get your return months in advance. And if you file online, you can get it even faster.
Paper filing can sometimes take weeks for the IRS to process, even if you file early. E-filing your taxes and opting for direct deposit is often a lot quicker. Those who e-file can see the money in their account in an average of three weeks. If you use your tax return to pay down debt, getting your return earlier means you can pay debt earlier and avoid interest.
And data shows that those who file their return earlier tend to get a bigger check. The IRS notes that those who file by the end of February sometimes get up to $400 more in their return than people who wait until March or April to file. If you were given the option to get more money sooner, you'd take it, right?
Avoid Tax Return Fraud
Tax fraud happens when someone else files your taxes and receives the return that was intended for you. All someone needs is your social security number, and then they can file taxes in your name. In 2018, this was the third most common type of identity theft that was reported to the Federal Trade Commission, however, this can be relatively easy to avoid.
Filing your taxes early gives someone else less of a chance to scam you out of your return. Once your taxes are filed, your chances for tax fraud are eliminated for that year. The IRS estimates that these scammers attempt to steal billions out of the pockets of normal people every year, and if you find that your identity has been stolen, the aftermath of getting everything sorted out can cause a huge headache. In addition to always shredding mail or documents that contain your Social Security Number, file your taxes early to get a jump on the scammers and stay ahead of the game.
Beat The Rush
As April 15th draws closer, more and more people head to tax preparation services for the help of a tax professional, and the post office gets flooded with customers mailing their returns. CPAs and other tax professionals won't be as busy in January or February as they are later in the season, so they can give you the time and attention that you need. And you can beat those post office crowds by filing early, too.
Filing early also gives you more time to look over the forms to make sure you don't leave any information out. Those who end up rushing through their filing at the last minute can type in incorrect information or may even miss out on extra deductions or credits. If you make a mistake at the last minute can trigger an audit or penalty. And of course you don't want to miss out on any deductions or credits that you can take advantage of to get more money back in your pocket.
Extra Time To Get Help And Pay What You Owe
As you begin to file your taxes, you may find that it's more complicated than you expected. Maybe you've had changes since last year, like getting married, having a baby, or buying a house. Or maybe you took on some freelancing or contract work and aren't sure how to handle it. All of these factors make filing your taxes a little more complicated. Give yourself as much time as possible to figure out what you need to do to get the proper credits and deductions.
And if you find that after you file, you owe the IRS money, you'll have extra time to get your finances in order and pay down the money you owe. You aren't required to pay your taxes until the final filing date in April, so if you submit your taxes early, you can give yourself extra time to arrange payments to the IRS.
That being said, if you know you owe money, you may feel like putting off filing your taxes for as long as you can. However, it's a smart idea to prepare your taxes now, as you can get a better idea of how much you'll need to pay and how you can get that money.
No Need To File An Extension
Many people who wait until the final deadline find that they don't have time to complete their taxes by April 15th. They then need to file for an extension, which gives you six extra months to file your taxes. While this might seem like an extra reason to procrastinate, resist the temptation. If you find that you owe the IRS money after you've applied for an extension, you'll likely owe interest and penalties on that money.
Often times, people don't file for extensions out of financial need, they do it because they procrastinated and need more time to find all their deductions. It can save you stress to just get it out of the way before filing your taxes becomes a nightmare.
Though filing your taxes may not be your idea of a good time, there are a lot of reasons you should get a head start and file your taxes early. It can get your returns into your hands sooner, prevent scammers from stealing your money, and prevent the anxiety of a last-minute filing.