When tax season comes around many people tend to wait until the last minute to file their tax returns, but there are many reasons as to why you should file your taxes early, even if you can’t pay.
1. You get your tax refunds faster – The most common reason as to why people may file them right away is so that they can receive their refund quicker. The best way to do this is to set up direct deposit to insure you get your return quicker because it can take up to several weeks for paper returns.
2. You get extra time to pay taxes you owe – If you file your return in mid-January, you do not have to pay taxes you owe until the filing deadline in mid-April. Preparing ahead of time will give you time to arrange your payment. This will be helpful because it will give you an exact amount of how much you owe, and you will have time to pay it off. If you wait until the last minute, then you don’t have much time to plan payment or get all the money together.
3. Obtaining financial information – If you are expecting a big life change such as purchasing a home or returning to college, preparing your tax return early can help you obtain essential information. College students use the information from Form 1040 to apply for financial aid, while prospective homebuyers often must show their completed tax return as proof of their household income.
4. Avoiding a tax extension – Extensions of time are usually because of disorganization instead of financial need. If you wait until the last minute you increase your likelihood of having to get professional help to sort out all finances to complete your return.
5. Avoid penalties – Also, if you file an extension but don’t pay what you owe, the IRS will charge you interest and penalties on the outstanding tax debt until it is paid in full. Even if you don’t file a tax extension you will still have to pay interest and penalties if you don’t file your income tax on time.
6. Preventing tax return identity theft – Once a criminal gets access to your social security number, they have everything necessary to file a tax return in your name. The purpose of this is so that they can pocket your refund. This usually happens early in the tax season so if you file your taxes early then you can avoid something like this.
“Top 5 Reasons to File Your Taxes Early.” Turbotax Intuit, 2018, turbotax.intuit.com/tax-tips/general/reasons-to-file-taxes-early/L8MfjPPjg.