For many of us, putting off our taxes is as natural as avoiding your next root canal.
But believe it or not, filing your taxes early may actually take some of the sting out of the upcoming tax season, making it a little easier and lot less painful to deal with your federal tax return.
Here are 5 reasons to file your taxes early this year:
1. You’ll get your refund faster
Looking to make some headway on those post-holiday credit card bills? Have a vacation coming up and need some extra cash now?
Filing your taxes early not only puts that refund check in your hands months in advance, but also provides the extra funds you need to catch up on expenses, buy that phone you’ve had your eye on or add to that vacation nest egg sooner than you thought possible. An early refund is like a bonus check from the IRS, providing a boost to your bank account and a great way to get your new year started right.
- The IRS can sometimes take several weeks to process paper returns, even if they’re filed early. E-filing your return with direct deposit is the best way to get your refund quickly.
When does tax season start?
Tax season officially begins on Monday, January 27, 2020. This is the earliest day you can file your federal tax return.
2. You’re likely to get a bigger refund
File your income tax early and you’ll not only get your money back faster; you’re likely to get more than you expected.
Recent data has shown that taxpayers who file before or by late February receive much larger refunds than those that wait to file—an average of $400 more than people who wait until the April deadline! While there’s no guarantee you’ll get that much more money, filing early could be exactly what you need to beef up that refund check and add a little more to the bundle in your wallet.
The sooner you start preparing your taxes, the more chances you have to claim every tax credit and deduction you’re qualified for, ensuring you get the refund your family deserves.
Is there any penalty for filing early?
Not at all! Once the IRS starts accepting federal returns, there’s no penalty or fee for filing early and getting the ball rolling.
3. You’ll have extra time to pay the taxes you owe
If you do owe money to the IRS, taking steps to file your taxes early can provide valuable extra time to organize your finances and get ready to pay down your balance. Because taxpayers aren’t required to pay their federal taxes until the April filing deadline, you can submit your return early and give yourself more time to arrange your future payment.
Of course, people are more inclined to put off filing their taxes for as long as possible when they know they owe money. But if you take the initiative and prepare your taxes now instead of later, you’ll have a better sense of what you’ll need to pay and much more time to get things in order before the tax bill is due.
In other words, getting the facts now on what you owe can help prevent unexpected surprises down the road, saving you from the anguish and last-second scramble that comes when the taxman knocks on your door.
How can you file taxes early?
Filing your return early is done much the same way as filing by the deadline. As long as you have the necessary forms and can provide the IRS accurate reporting of your income, you may begin the 2020 tax filing process.
Forms commonly needed to file your taxes include:
- W2s (employer-provided income info)
- 1099s (self-employment, retirement and investment income records)
- Form 1040 (used to report your income and file your return)
4. You can prevent identity theft
It’s Tax Day. You’ve just finished your tax return and clicked on submit when… thud. It’s rejected. As it turns out, someone’s already filed a return using YOUR Social Security Number (SSN), making you just another victim of identify theft and tax refund fraud.
The IRS estimates that online refund thieves try to steal billions in taxpayer money each year. And while the government is able to thwart much of that theft, a healthy chunk (more than $1 billion) ends up in fraudster’s pockets, putting your hard-earned money up for grabs and potentially in the hands of online criminals.
When you file your taxes early, you’re reducing the odds an identity thief can use your SSN before you do, protecting your return in the process. Not only that, but you’re avoiding a potential mess with the IRS that can take months or longer to clear up—as well as to get the refund you’re rightfully owed.
How can I protect myself against tax refund fraud?
Filing your return early is just one way you may lower your risk of refund fraud. Other methods for protecting your personal info include:
- Shredding documents and mail containing your SSN
- Never using your SSN as an online password
- Avoid giving your info out for any reason
5. You can eliminate stress
Tax time is stressful enough. But when you wait until the last minute to get forms ready and sort through deductions, it often only adds to that frustration and makes filing your return much harder than it should be.
Beginning the process early not only gets you your refund quicker or allows you to better prepare for your upcoming tax bill; it also eliminates the need to rush toward the finish line, giving you time to learn each tax advantage and how best to maximize your federal return.
And once you know your return is filed, you can rest easy knowing you’ve beat the deadline and can now focus on what’s really important: living your life.
Can you file taxes early without a W2?
It’s always advisable to wait for your W-2s before filing your federal taxes. But if you’re looking to file early and your forms haven’t yet shown up, you may be able to file using IRS Form 4852.
Looking to file early? To get your return started on the right foot, visit your local tax Liberty Tax® pro today.