By Harry Smith
As much as it is a dreaded task and no doubt you have until April 15 of every year to file your taxes, processing your returns as soon as possible is the best route to walk on. It will give you an idea if you get a refund or a tax bill and this can save you from a massive headache. In the US, the IRS started accepting tax returns on January 27, 2020.
Here are three major benefits of filing your taxes early:
- You get your refunds sooner
- You can protect yourself from identity thieves
- You have more time to pay your tax bill
Get Your Refund Sooner
This is the number one reason many people (and you should too!) file their taxes early. This simple reason gives you faster access to get your tax returns. How long do you have to wait after you’ve filed your taxes? Usually, the IRS takes less than 21 days to issue about 90% of refunds. The more straightforward, clear cut your form is, the faster you get it processed. You can also check processing time through the IRS website.
Reduce the Chances of Tax-Related Identity Theft
Identity theft is a big deal and as the world continues to be increasingly digital, the threat is real and can occur at any point, at any time. In the case of taxes, identity thieves use stolen Social Security numbers (SSN) to make fraudulent tax returns from the government, which is supposed to go to you. When tax season comes, identity theft rises. When the actual person uses their SSN to file their taxes electronically, the system usually rejects them because it flags it as a duplicate. This not only slows down the refunds process, which is the least of your problems, but it also means your personal data has been compromised. You would need to investigate all other aspects of your digital data from bank accounts, credit cards, etc. to make sure that nothing has been stolen. Filing your taxes early minimizes the possibility of fraud issues, though it does not eliminate the problem entirely.
Give Yourself Time to Pay Your Tax Bill
Getting your refunds is a blessing but the other headache is when you owe taxes. If this is the case for you, you want to know how much you owe, and you’ll have adequate time to acquire the money to make payments. Ideally, you do not want any tax bill to come as a surprise. Make it a point to send your tax payments to the IRS before the April 15 deadline because you’d be collecting interest and fees after the tax deadline. There are also penalties between 0.25% to 25% if you fail to pay on time. You don’t want to owe the government money and you certainly do not want to pay more than you should.
There are many more reasons why filing your taxes will benefit you, but the ones mentioned here are among the most important and crucial. You don’t want to delay getting your money if you are entitled to a refund and you certainly do not want to owe more money than you already do to the government by not paying your tax bill in time. Creating an excel sheet or document to record your expenditure, receipts, payments and so on is an excellent way to manage your finances. Ideally, using a tax return calculator such as https://www.taxfyle.com/tax-return-calculator will give you an idea of whether or not you’ve underpaid or overpaid your taxes.