No one looks forward to tax time. In fact, your dread could be so strong that you put it off until the last minute, or even beyond. While you can file an extension if you’re running behind, it’s actually better to file your taxes on time, or even early. Why should you get a jump on things? What advantages do you see by having your personal taxes handled as quickly as possible? Below, we’ll run down a few important things you should know about filing in a timely manner.
What Does “On Time” Mean?
First, let’s start out with defining what we mean when we say “on time”. We don’t mean early. Filing too early is silly – you won’t get your refund any faster than someone who files on time. Depending on how early you file, you may have to wait as long or longer for your refund check to arrive than those who file weeks or even months after you do. So, file on time, not super early.
Make Sure You Have Your Paperwork in Hand
Make sure that you have all your forms in hand. If you’ve worked for multiple employers during the year, either as an employee or as a subcontractor, you might have forgotten about one or two. Jumping the gun here can mean big problems down the road. Make sure you have tax documentation from all your employers/jobs over the course of the year.
Don’t Jump the Gun
Finally, avoid filing too early, because the IRS can make changes or amendments to forms, policies and rules all the way up until the final date. You’ll need to file an amended return if that’s the case, and get it to the IRS before the filing deadline.
With all that being said, there are far more benefits to filing your taxes on time, rather than waiting even for a little while. Let’s consider a few of them.
One reason to at least start preparing your taxes early is this – it lets you maximize your return. In fact, the IRS reports those who file their taxes early receive $300 more per return than those who file late. This isn’t because they earn more money per year necessarily, but that they have more time to maximize their deductions. If you’re in a rush, you’re more likely to miss deductions that could save you a lot of money. If you start early, you’re more likely to get all the deductions available to you. Also, working with a professional tax preparer early on in the process helps ensure that you’re not missing out on some of the more commonly overlooked tax deductions.
Reduce Your Stress
Let’s face it, filing personal taxes is always a stressful, harrowing business. You’re worried that you’re missing deductions, that you will earn too much to receive a refund, and more. By filing early, you have time to come to grips with your filing situation, find workarounds to your issues, and make sure that you’ve got all your I’s dotted and T’s crossed. Of course, working with a professional tax preparer will also reduce your stress level dramatically.
Plan for Bill Payment
Make too much last year? Owe Uncle Sam more than the IRS withheld? By filing early, you gain the advantage of additional time – time you can use to plan about how to handle your additional tax debt. Those who file late don’t have that benefit. In fact, those who owe and file late many times end up filing for an extension. During that time, they’re accruing additional interest on the money they owe the government, and deepening the hole they’re in.
No Wait with Preparers
We’ve mentioned the benefits of working with professional tax professionals, and starting early offers benefits on that score, as well. By getting a jump on things, you’re able to avoid the tax-time rush. That not only reduces your stress, but it ensures that your professional preparer has as much time as possible to work on your return and maximize the amount you get back.
Get a Jump on Life Changes
You cannot rush into some of the big decisions in life. However, you need to have financial information before making a choice. Filing your taxes early ensures that you have access to the information you need when you need it. For instance, your child might need tax information to file for financial aid to get into their school of choice. You might need that financial information if you’re planning to buy a new home, a second home or a vacation home. Get a jump on your taxes so you have a leg up on the process.
Lessen the Chance of Identity Theft Affecting Your Taxes
Identity theft is a huge industry today, and thieves are targeting more and more people. A thief can take your name and Social Security number, file a fake tax return and obtain cash from the government. By the time you file your actual return, the government has recorded your situation as paid. It can take months, even years, to get this straightened out. By filing early, you get the jump on would-be identity thieves and ensure that any return the IRS mails goes to you.
When it’s all said and done, filing your personal taxes early is not just a smart decision, it’s a crucial consideration. It gives you more time, flexibility and the added benefit of being able to maximize your return with deductions that you could miss if you were rushing through the process. Work with an expert tax preparer and get a jump on things this year.