When it comes to filing taxes, many people drag their feet and wait until the last possible minute. What they may not be aware of is that there are benefits to filing those taxes early. Being organized and on time will not only save you the last-minute hustle, but also give you the financial edge in several ways.
“It’s common for people to procrastinate when it comes to filing taxes, but that can end up leading to oversights and problems later,” explains John Gregory, tax practitioner and founder of 1040Return.com, a site providing tax preparation and resources. “It’s always better to file early and get that big task off of your to-do list.”
Here are six reasons to file taxes early:
- Get Quicker Refunds. Filing your taxes early is a good move especially if you have refunds coming. In case the amount you paid exceeds your actual taxes, the IRS refunds you the difference. Early filing, say during mid-January, the official date for commencing the processing of tax returns being 20th January, helps you get your refund at the earliest. The early birds usually get their refunds within 21 days after filing their taxes but they can come back as quick as 3 days.
- Cut Down the Odds of ID Theft. The incidents of identity theft are often higher during the tax season. The perpetrators can file taxes in your name with a phony address and your money goes to them. They will just need your name and social security number to execute the scheme. If you file your taxes ahead of time, you save yourself from being the victim of identity theft. The odds of that happening to you might be low, but there’s no reason to take the chance.
- Arranging to pay off the Balance Due. Early filing gives you a lot of time to plan for paying off the balance due in case it turns out you owe the IRS any. Preparing your Form 1040 early will give you an advantage if you are yet to discover how much taxes you are supposed to pay. You will have plenty of time till mid-April when taxpayers are supposed to pay off the balance due to the IRS. This will certainly help you circumvent the hassle of arranging funds in the nick of time.
- Boosts your Financial Aid. This is a important factor for those whose children want to apply for financial aid for their college tuition fees. Filing your taxes early helps maximize the amount of financial aid your children would receive. Initially, you need to fill the Free Application for Federal Students Aid or FAFSA with a tentative amount. When you file the taxes, the correct amount gets automatically imported into the FAFSA from the IRS through the data retrieval system that they have in place. Simply put, the authorities will have more funds at their disposal in the beginning to help the first comers with.
- Find Yourself a Good Tax Preparer. Doing their own taxes is not everyone’s cup of tea. The laws, procedures and documents are very complicated. If you don’t do your taxes, you will need some time to find yourself a good tax professional. Make sure you choose a certified tax preparer who handles filing of taxes all through the year. This is important because you will be paying the tax preparer to file your taxes diligently and correctly. Any errors and delays in the filing of taxes can invite fines; even worse, audits. So take your time to find a reliable professional who will not only do their job well, but also take responsibility and make amends should anything go wrong.
- Reaping the Benefits before Your Ex-Spouse Does. This reason plays a significant role in the case of divorced individuals. You definitely don’t want your ex-spouse to gain financial benefits at your cost, now do you? No matter whom the court awards the custody of the children, the IRS will treat the children as the dependents of whoever files heir taxes first. So if you have had a divorce and have children, file your taxes early. This will help you avoid significant tax bites.
There is one major downside of filing taxes early. The government could make changes in the tax laws, documents and procedures. So just watch out for any reports and stay updated on such unanticipated changes, because you will need to revise your filing accordingly. Moreover, it would be very smart of you to e-file your taxes rather than sending the forms and documents by mail if you wish to get a faster refund. Have the IRS send you the refund through a direct deposit instead of mail.
“Why wait until April to file your taxes, when the IRS will be busy processing everyone’s taxes and you could possibly be in a mess for being unorganized?” adds Gregory. “There are many convincing reasons to avoid procrastination and file early.”
1040Return.com provides tax software resources, information, tools, and more. It has been designed to help the self-employed and small business owner. They have also conducted research to calculate the average net profit for all 318 industries, based off of average gross sales. This free information helps small business owners maintain accurate records and provides an idea of IRS expectations. They also provide audit protection insurance that helps if there is ever an audit. For more information on 1040Return.com visit the site at: www.1040Return.com.