For people who dread tax time, it’s tempting to put off dealing with tax preparation until the last possible minute. Why rush? Believe it or not, there are actually several good reasons to get your taxes done early.
1. Thwart Identity Theft
It only takes a Social Security number. With that, a criminal can steal your identity, file a return in your name and steal your refund. While this issue underscores the importance of safeguarding your Social Security number, it is simple to prevent. All you have to do is file first. Check out Protect Yourself from Identity Theft for more tips on protecting your identity.
2. Get Your Refund Faster
If you’re expecting a refund, filing your taxes promptly allows you to get your money faster. According to the IRS, taxpayers who file early in the tax season generally benefit from quicker processing times and get their refunds in about three weeks. In contrast, individuals who drag their feet and file near the end of tax season will likely have a month-long wait for their refunds.
3. Snag Your Deductions
Some deductions can only be used once. For example, what happens if you and your partner cannot agree on who should claim your children as dependents? The IRS won’t bother to decide who should do so. Right or wrong, the first parent to claim the children wins the deduction. If you’re concerned something like this might be an issue for you, filing early increases the odds that you’ll get the opportunity to claim your deductions.
4. Avoid Costly Extensions
Filing early is smart even if you know that you’ll owe the IRS. Why? Filing early doesn’t mean paying early; you can still wait and pay your taxes in April. But it does allow you to determine exactly how much you owe and work out a payment plan so that you don’t have to file for an extension. After all, extensions can be costly because the IRS adds interest charges to the total amount you owe.
5. Be Prepared for the Unexpected
What happens if you discover that you’re missing vital paperwork in the middle of the tax prep process? If you got a head start, then you’ll have plenty of time to deal with any problems that surface. If you’ve waited until the last minute, any unexpected complication will force you into a mad scramble and may even require requesting a potentially costly extension.
6. Maximize Financial Aid
If you have college-age children who are counting on financial aid, accurate tax information is vital. Preparing your taxes early ensures that you’ll have the data you need and may even help the students in your family snag a bigger piece of the financial aid pie.
7. Wave Goodbye to Worries
Life today is hectic, and the mere thought of tangling with the IRS is stressful. Filing your taxes early allows you to cross a task off your to-do list and wave goodbye to at least one of your worries. Isn’t peace of mind a beautiful thing?
Whether you prepare your taxes yourself or rely on a tax professional, getting your taxes done early is a smart choice. Not only does it help prevent potential problems like theft, fraud and the hardships that missed deadlines can cause, it also offers very real benefits. Preparing your taxes early can help you get a refund faster, provide the financial data you need and bring the annual worry of dealing with the IRS to a quick end. Why wait?