You have until April 15, so it can be easy to put off doing your taxes until, say, April 14. However, being proactive and filing your taxes early can provide some definite benefits. This year, the IRS began accepting 2020 tax returns on February 12. Here are six reasons to file your taxes early.
YOU COULD PREVENT FRAUD
With cybercrime on the rise, it’s difficult to be completely confident that your personal information hasn’t been compromised in some way. And if someone gets access to your Social Security number, they could file a tax return in your name and help themselves to whatever refund you’re owed.
One of the best ways to prevent this from happening is to file before the cybercriminal does. Once taxes are filed in your name, the IRS will reject additional returns. In fact, if someone files before you, it makes it more difficult for you to file your real return. Getting your taxes done early on can help prevent this: The earlier you file, the less time potential scammers will have to file in your name.
YOU CAN EXTEND THE TIME TO PAY IF YOU OWE
If your employer didn’t withhold enough from your paycheck throughout the year, you may owe taxes. If you’re in the situation, it’s best to find out early so you have more time to come up with a plan. While the IRS can work with you to set up a payment plan, you’ll typically wind up paying more in the long run because of interest and fees. Having extra time to adjust your budget may mean you can pay what you owe by April 15 deadline.
YOU’LL RECEIVE YOUR REFUND SOONER
If you don’t owe money this year, you may be getting a refund. In 2020, the average tax refund issued was $2,622.
If you’ve got money coming your way, you may want to consider some smart ways to use that cash, whether you plan to splurge a little, add to your retirement savings, pay down debts or tackle a different financial goal. After all, once you’ve fulfilled your civic responsibility, it’s time to see your money work for you.
YOU MAY AVOID MISTAKES BY TAKING YOUR TIME
Sure, some of us perform better under pressure. But doing your taxes can be confusing process. Starting early will allow you to take your time, which can help cut down on mistakes.
YOU’LL CAPTURE YOUR TAX PREPARER’S ATTENTION
If you have a more complicated tax situation or just prefer to hire a professional, snag an appointment early. Not only will your preparer have more time to spend (translation: getting you the biggest refund possible), but you’ll also avoid paying a rush fee for waiting until the last minute.
YOU’LL BE ABLE TO RELAX
The truth is that, like many unpleasant tasks, the worst part of filing taxes typically isn’t the process itself, but the dread you feel about it. Crossing it off your list will put an end to the stress.
If you still aren’t convinced, keep in mind that even if you file for an extension, you won’t have any extra time to pay any money you owe — you’ll just have more time to submit the paperwork.
This publication is not intended as legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.