When it comes to a job interview, a restaurant special, or a first date, being an early bird can be quite beneficial. Another activity in which being early is a wise idea involves preparing and filing your income tax returns with the IRS. Check out these five reasons to file taxes early in tax season rather than waiting until the bitter end to file in April:
1. It gives you more time to pay your balance.
Filing taxes early is often advantageous if you will owe taxes to Uncle Sam. If you file your tax return in the first month or two of tax season, you won't be on the hook for covering your balance until the April 15th deadline arrives.
Organizing all of the paperwork and information you need to complete your Form 1040 can buy you some extra time to get your return in order, whether you choose to e-file or send a paper return. This additional time is very significant for individuals who need to determine how much they'll owe the IRS so they can budget for the bill when the time comes to pay taxes in April.
2. You should get your tax refund check faster.
Nearly eight out of ten filers receive a tax refund. It's almost like getting a gift in the mail when you open that IRS refund check. Because of this, a nice perk to early tax preparation is being able to secure your refund money sooner, especially if you file taxes online. We're all faced with cell phone or cable bills every month. So, when some extra cash comes in, it certainly can help.
3. You won't have to file for a tax extension or face costly penalties.
If you have to file for an extension of time to file your taxes, don't feel guilty. There are many circumstances that come up in which an extension is absolutely necessary, and early taxes or even on-time filings are just not feasible. But putting off your tax-filing obligations simply adds another task to your ever-increasing to-do list for later.
In a similar vein, you don't want to be faced with either late payment penalties or late-filing penalties. Americans literally hand over an unfathomable amount of money to the IRS each and every year, so nobody wants to get an even higher tax bill in the mail.
4. It takes the stress out of tax season.
Tax season can be an incredibly hectic time of year, especially since it includes the first few months of a calendar year when school is in session and people are working more hours than ever after the holidays. However, completing your tax forms and having the convenient option of filing your tax return online should never make you crazy. Getting your return filed early is a simple way to remain calm this time of year.
It's particularly important for small business owners to try filing early, since they often face countless responsibilities that have nothing to do with business taxes and accounting. If you're a business owner, crossing tax preparation off your to-do list lets you focus on marketing your products and services to increase revenue for covering your business taxes.
5. It can help you avoid a tax scam.
Tax fraud has become an out-of-control problem that impacts millions of Americans each year. Regardless of where you live or how much money you have in the bank, there is a greater chance than ever of becoming the victim of a complicated tax scam involving identity theft. Being the first in line when it comes to filing taxes can help you significantly reduce your chances of fraud.
If you submit your income tax return to the IRS before a scammer steals your identity and does so in your name, you can essentially block fraudsters from filing a return using your personal or business information. Every year, scammers make millions illegally by taking refund money away from those for whom it is actually intended. Taking preventive measures like filing early can help you sleep easier at night.