Should You File Your Taxes Early?
As the New Year begins, most of us have one thought in the first three to four months – filing our tax returns. With the financial year ending on 31st December every year, no doubt that tax filing is on our minds as we progress into the New Year.
The IRS allows you to file your tax returns starting from January while the last date of filing tax return is sometime in April.
For instance, for the year 2016, 23rd January 2017 is the date from which IRS is accepting your tax returns and the deadline is extended till 18th April, 2017. So, when are you filing your taxes?
Procrastination is a very common habit in most of us especially when we are required to part with our hard-earned money. In case of filing our federal tax returns too, most of us delay filing our returns till the last possible time. However, there are many of us who are smarter about filing tax returns. We file our returns early to enjoy the corresponding benefits. Yes, filing your taxes early has various benefits. Want to know what? Find them below:
Benefits of filing your taxes early
Faster tax refunds
The proposition of getting your tax refunded sounds good, doesn’t it? Wouldn’t you like to get the refunds at the earliest? When you file your taxes early, the IRS also refunds any extra tax paid by you faster. As the IRS predicts, more than 75% of tax-payers are eligible for a tax refund which they try and pay within 21 days of your tax filing, you should file your taxes and get the refunds at the earliest.
Lower chances of tax frauds
Believe it or not but there are fraudsters out there who use your personal details to claim your tax refunds. These fraudsters file your taxes in your name at the earliest so that by the time you file your returns (when you are filing late), they can already pocket your refunds. When you file early, you are eliminating the possibility of such fraudsters claiming your tax refunds.
Better chances of arranging the funds to pay the due tax
When you prepare and file your returns early, you get a clear picture of the actual amount of tax you owe the IRS. Since you can pay the outstanding tax by the deadline in April, you would have enough time to arrange for the funds which would be required to pay off your taxes due. When you file late, you discover the tax amount late too and by that time you might not be able to arrange for funds before the deadline. Non-payment of your taxes by the deadline would then incur penalties and fines. To avoid this situation, you should, ideally file early.
Higher chances of preparing the correct return
When you have time, you can prepare your tax return slowly and correctly. This way you could avoid the mistakes while preparing your returns which ultimately lead to penalties and fines. When you delay till the latest possible date, you tend to hurry which causes errors in your tax returns.
No need to file for an extension
You can file for a tax extension if you feel that you wouldn’t be able to file your return by the expected deadline. Though the IRS allows such extensions, you need to undertake a lot of paperwork and complete different formalities. Moreover, if you are not able to pay your taxes even within the extension tenure, you would be penalized or charged a fine. You can avoid all this when you file early as early filing gives you enough time so that you don’t have to file for an extension.
Wise men have said that the early bird catches the worm and so, an early tax-filer also gets to enjoy the benefits. Since filing your taxes is a mandatory requirement, why delay, especially when delaying has so many disadvantages? File your tax today and get rid of worrying about your tax returns.