Why you should do your taxes early, and how to get started
You could stop identity thieves in their tracks
It is easy to put off doing your taxes until the last minute. No one likes to deal with the IRS, and sometimes, procrastination happens as a result.
Even so, there are some great reasons to file your taxes early. Even if you do not have all the documentation you need, you can still fire up your preferred tax-filing program, enter the information you do have on-hand, and see where you stand.
Here are some smart reasons to start working on your tax return today.
You will get your money back more quickly.
The most compelling reason to file your taxes early is also one of the most selfish: You will be among the first in line for your refund, and you can use the money any way you like.
Filing early can jump-start the refund process, especially if you use e-file to submit your return. If you file your return electronically, you could have your refund in as little as seven to 10 days.
It’s a chance to lower your taxable income.
Tax filing season does not end until mid-April, and that’s good news if you want to lower your taxable income. The calendar year may be over, but you still have a chance to reduce what you owe, if you start the filing process early.
If you run the numbers through your favorite tax prep software and do not like the results, you may have a chance to reduce the amount you owe or bulk up the size of your refund. Making a contribution to an IRA, for instance, or opening a health savings account, could potentially reduce your taxable income by thousands of dollars, and that could be good news for your finances.
You could stop identity thieves in their tracks.
Criminals have discovered tax returns in a big way. Armed with stolen Social Security numbers and other personal information, armies of criminals take to their computers every January, attempting to beat legitimate taxpayers to the punch.
If you want to stop those identity thieves in their tracks, filing your own return early is a good place to start. If you have all the information needed to file your return, there is no reason to put it off.
You will know where you stand.
The tax laws are always changing, and you can not simply assume that the refund you received last year will be just as big this year. On the other hand, if you owed money last year, don’t assume you’ll be writing the same check this year.
Filing early gives you a chance to see where you stand, so you can plan for what you owe or start thinking about ways to use that big refund. Even if you do not have all the documentation needed to actually file your return, you can still run the tentative numbers and see where you stand.
You will have more time to pay what you owe.
Hopefully your advance tax planning will result in a big fat refund -- one you can get in your hands quickly -- but even if you owe money to the IRS, getting an early start will put you ahead of the game.
With some time to still go before the actual tax filing deadline, you can save a little from each paycheck, so you will have the cash on hand to settle up when the time comes. And if this year’s tax bill is too big to bear, you still have time to contact the IRS about an installment or payment plan.
Even though filing taxes isn’t something we might think of as a good time, we think the reasons listed above sure bring some compelling reasons to get them done sooner rather than later.