Most people know taxes are due April 15 each year, or by the next business day if the 15th falls on a weekend or a holiday. But just because you have until April to submit your tax return to the IRS doesn't mean you have to wait until the last minute. In fact, the IRS begins accepting returns as early as the end of January. For example, for your 2018 taxes, the earliest day you could submit your returns was Jan. 28, 2019.
While doing taxes isn't fun and it's tempting to procrastinate, I like to get my taxes done as early as possible every year -- and you should strongly consider doing the same. There are a few key benefits to completing your taxes early, including the following four advantages.
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1. You can find out right away if paperwork is missing
When you file your taxes, you'll need lots of different information to complete your forms, including details on your income and any deductions you claim.
Some of this paperwork needs to come from employers and companies you do business with. For example, you may need interest statements from your student loan servicer or mortgage lender if you hope to deduct mortgage or student loan interest. And you'll want W2s and 1099s from your employers or those who paid you non-employment wages during the course of the year.
While employers and other companies are supposed to send out this paperwork to you, sometimes it never shows up. And when this happens, it can take you time to track down the documents or get the numbers you need. One year, for example, my mortgage interest statement didn't arrive, so I had to contact my lender to figure out the total tax-deductible interest I'd paid during the year.
If you wait until right before the tax deadline to prepare your return, you may not find out the paperwork you need is missing until it's too late to get copies. This could leave you with incomplete information to file your taxes, which could make your return late or force you to file for an extension. It's far better to get your taxes taken care of ASAP so if you hit a snag because of missing forms you have plenty of time to get what you need.
2. You'll know sooner how much you'll get back -- or how much you'll owe
Most years I owe money on my taxes, both because my income is irregular and because I don't like getting a tax refund.
I want to know early on how much I owe so I can make sure I have the funds available to pay by the April deadline. If there's a chance you'll owe, you also want to find out early, as penalties and interest begin accruing starting the day after payments are due.
If you're getting a refund, it's also helpful to file early so you can get your refund sooner. When you get a refund, you've already given the government an interest-free loan. There's no reason to let them keep your money for even longer than necessary by waiting until April to file. Get your return submitted ASAP so you can get your refund and use it to bulk up your emergency fund, investment for retirement, pay down debt, or accomplish other important financial goals.
3. You're less likely to be rushed during the filing process
The average American spends around 13 hours preparing their tax return. This is a big chunk of time, especially when you have work and family obligations. Unfortunately, if you wait until the last minute to file your taxes, you may not have a lot of uninterrupted hours to complete your return. You could end up rushing through the process, which could lead to mistakes or to missing out on deductions and credits because you don't have time to research all the tax breaks you're eligible for.
Because I start working on my taxes early, I have lots of uninterrupted time to complete forms at my leisure. I can check and double check the information before it's submitted, and catch mistakes or omissions before they lead to an IRS audit.
4. You can file early to fight identity theft
Finally, by filing a return early the risk of identity theft is reduced. Each year, scammers use stolen social security numbers to claim a fortune in refunds they didn't earn. I certainly don't want my Social Security number to be one of them.
But the good news is the IRS accepts only one tax return per Social Security number -- so if you get your legitimate return in using your Social Security number before an identity thief gets a chance to file a fraudulent return, your forms will be the ones accepted, and you can thwart the thief's efforts to misuse your identity.
And if you try to submit your return and it turns out one has already been submitted with your info, you'll find out about it much sooner than if you'd waited. This gives you more time to take action to correct the problem and minimize the delay in claiming any refund you're owed.
Why not get started on your taxes today?
If you've been putting off working on your taxes, why not follow my lead and decide to file early this year? Get started today on completing your tax forms and get your returns submitted to the IRS ASAP. When you get your refund sooner, have more time to correct problems, or are able to find out what you owe faster so you can save before April 15, you'll be glad you acted early.
