Why It's Imperative You File Your Taxes Now, Not Later

While taxpayers have until April 17 of this year to file their federal income tax returns, it isn’t in their best interest to wait to do so. Despite, if you are expecting a refund or will owe a balance, filing early is always better than filing later. While many Americans rush to file in April, there are many benefits and reasons why you shouldn’t wait till the last minute.

Here’s why “The early bird catches the worm” applies to filing your taxes as well.

One of the biggest reasons to file early is you will receive a faster tax refund. As soon as you receive your W-2 and you check it over for mistakes, you can file your return. The IRS issues about 90 percent of refunds in less than 21 days, an even faster way to receive your refund is to e-file and have the money deposited directly into your bank account. Early filers also tend to get larger refunds. This is attributed to the fact that those who get a head start on their taxes have more time to be thorough that they claimed all the deductions that they are eligible for. Most taxpayers cut corners by claiming standard deduction instead of itemizing their deductions. It may take having some patience and require more documentation, but in the long-run, it could result in a larger tax-refund check.

Identity theft has increased over the past few years, especially due to the breaches such as the Equifax Data Breach of 2017. While filing your returns early does not mean eliminating identity theft completely, it can help protect your refund and potentially catch those who have stolen your information. Refund theft happens when scammers use your social security number to receive your refund. The IRS will then have you marked as being paid. Subsequently, when you go to file the real refund, the IRS will reject your return, and it may take months for the issue to be resolved. Filing your taxes early can help deter identity theft.

If you expect to owe on your taxes, filing early will allow you more time to allocate funds to pay the IRS. Last minute filers may have to greatly tighten their budget, dip into savings, or even their emergency fund to pay what they owe which can negatively affect their financial stability. If you owe a decent amount of money, budgeting ahead of time can make all of the difference because your tax bill can collect interest and penalties if you are charged for a late payment.

The longer you wait, the more of a rush it becomes to submit your return and this can create unnecessary stress. Being in a hurry can lead you to make mistakes or forget to claim some of your deductions which may put a strain on you financially. Getting your taxes filed sooner means getting it out of the way and not having to stress over it. Additionally, the closer it gets to the tax deadline, the busier accountants get. Unfortunately, taxpayers learn the hard-way to set up their appointments early because they end up having to file for an extension or need to pay more money to be squeezed into the tax professional’s busy schedule.

Photo Courtesy of MoneyManagement

Don’t drag your feet when it comes to filing your taxes! As soon as you have all the necessary information and financial documentation, it’s in your best interest to move the process along as quickly as possible.