Filing income taxes isn’t exactly the most exciting thing in the world, and given that we have a full 3½ months to get it done, it’s not surprising that so many of us choose to put it off until just before the April 15 deadline. But there are important benefits to getting your taxes done early, some of which may come as a pleasant surprise.
|Tax Day Extension Reminder|
|For 2020, the federal tax filing deadline has been extended from April 15 to July 15. Learn more at IRS.gov.|
You Get Your Money Faster. This one is obvious enough. The sooner you file, the sooner you get your refund. Think about it: the average income tax refund is between $2,500 and $3,0001. Would you rather have that money now or later? That extra injection of cash will also come as a welcome relief in case you went over budget during the holidays.
It’s Less Stressful. The simple fact is that putting anything off to the last minute can increase the pressure you feel about it. The stress of filing your taxes could also be compounded by the fact it is required by law and the penalties for missing the April 15 deadline are not cheap!
There’s a Lower Risk of Errors. If you rush on your taxes, you are more likely to make a mistake — and mistakes on your taxes can take a lot of time and money to fix. This is important for anyone, but it’s especially relevant to people who might owe taxes to the IRS.
If, for whatever reason, you are short on the money you owe, or if you made a mistake, filing early gives you a window of time in which you can fix the problem — something you won’t have if you wait until April to file.
More Personalized Attention From Tax Professionals. Later in the year, tax professionals become VERY busy when more and more people try to make the deadline. While they are professionals, they are also human just like you. They’ll have a ton of other clients to work with, and they may not be able to focus on you and your unique situation as much as you’d like. (Some tax professionals may also offer discounts or other incentives to those who file earlier.)
There May Be a Lower Risk of Identity Theft. Many people may not be aware, but this is one of the most important benefits of getting your taxes done early. Tax refund fraud is a huge problem. In 2016, over $1 billion was stolen in the form of fraudulent tax refunds2.
Some impersonators will email or call their victims on the phone pretending to be the IRS. They may claim that the tax refund you received was a mistake and instruct you to wire it back (you’re really wiring it to them!). The scammers will often make threats of arrest or other severe penalties to intimidate their victims. DO NOT fall for this. (Here are some scam warning signs to look out for, provided by the IRS.)
The sooner you file your income taxes, the sooner you remove yourself as a likely target for this kind of crime. It’s best to claim the refund you deserve and move on with your life — before anyone else tries to.
What Are You Waiting For?
Managing your finances doesn’t have to be stressful. Getting your taxes out of the way early is one of the best ways to make this easier on yourself.
Start the new year off right: set aside an afternoon, make a pot of coffee, and get your taxes done. The sooner you get started, the sooner you’ll get your refund, and then you can kick back and relax — knowing that you beat the herd.
This article was updated on Feb 25, 2020, from its original posting on Feb 6, 2019.
Video produced by Sam Kittinger. Joe Guida contributed to this article.
1. Business Insider. “The size of your tax refund depends on where you live — here's how much the average person gets back in every state”. https://www.businessinsider.com/tax-refund-average-by-state-2018-1
2. Washington Post. “Thieves targeted $12 billion through IRS tax fraud”. https://www.washingtonpost.com/politics/2018/10/19/thieves-targeted-billion-through-irs-tax-fraud/?utm_term=.8461ef42b6dc