In case you didn't get the memo, the tax filing deadline this year is April 17, which is a couple of days later than the usual April 15 deadline. Why the added leeway? Because April 15 is a Sunday this year, the deadline gets pushed to Monday -- only Monday is Emancipation Day, a legal holiday in Washington, D.C., and you can't have taxes due on a holiday. Therefore, the entire country gets two extra days to get their tax returns in on time, and based on current data, it seems like many filers will take advantage of that brief extension.
A good 56% of Americans still haven't filed their tax returns, according to data from Twine & John Hancock, and while there are still a few solid weeks left before the deadline, you should know that there are benefits to filing early. Here are two big ones to consider.
1. You'll get your refund sooner
Roughly 80% of tax filers end up getting a refund each year, and if you're one of them, filing your return early could mean getting your hands on that cash sooner. Why is that so important? More than 60% of Americans don't have the money in savings to cover a $1,000 emergency. If you're one of them, that refund could spell the difference between paying an unplanned bill or resorting to credit card debt.
Now in case you're wondering, the average refund last year was close to $2,800 -- not a small amount. Even if you don't face a financial emergency in the coming weeks, wouldn't you rather collect a modicum of interest on that sum rather than allow the government to do so?
Furthermore, if your lack of savings keeps you up at night and causes you stress, having that money in your bank account might buy you some much-needed peace of mind. And since the IRS typically issues refunds within three weeks (provided you file electronically), you could conceivably have your cash in hand before the filing deadline rolls around if you act quickly enough.
2. You never know when you might end up owing money
Though the majority of tax filers wind up with a refund each year, there are inevitably a large chunk who come to owe the IRS money. Now maybe you weren't one of those people last year, or the year prior. But if you got a raise in 2017, earned money from investments, or had a change in your financial circumstances (say, a former stay-at-home spouse went back to work), there's a chance you might've underpaid your taxes, in which case you could end up with an unplanned bill on your hands come April.
Now we just learned that most Americans don't have the capacity to cover a $1,000 emergency. Well, what happens if you file your taxes precisely at the deadline and discover you're on the hook for a $1,000 payment? If you don't have that money in savings, you'll face penalties for paying the IRS late. Charge that tax bill on a credit card, and you'll risk racking up more interest than the IRS itself will charge you.
On the other hand, if you prepare your tax return several weeks in advance, you'll have more time to come up with that money. You might manage to sell some belongings, pick up extra shifts at work, or devise some sort of plan to pay your bill on time and avoid interest and penalties. But if you wait until the actual deadline, you'll be out of options in the absence of having that money in savings.
Keep in mind that you're allowed to file a tax return early and pay your bill later on. As long as the IRS gets its cash by the deadline, it doesn't matter that it's been sitting on your return for weeks, so you really have nothing to lose by doing your taxes now.
One final thing: If you're thinking of hiring a tax professional to prepare your return, you should know that the longer you wait, the greater your chances of having to go it alone. Many tax preparers find themselves completely booked once late March rolls around, so if you're planning to enlist outside help, you really can't afford to wait any longer.