5 good reasons to file your taxes early

If you are comfortable with managing your own financial matters, preparing your tax return using available software and then e-filing with any taxes due not payable until the filing date for that year is definitely the way to go. This article explains why.

https://turbotax.intuit.com/tax-tips/general/top-5-reasons-to-file-your-taxes-early/L9JXuiMNG

Top 5 Reasons to File Your Taxes Early

Written by a TurboTax Expert • Reviewed by a TurboTax CPA

Updated for Tax Year 2021 • January 11, 2022 08:42 PM

OVERVIEW

Every year, many taxpayers wait until the last minute to file, even though filing early has some great benefits. Here’s the top 5 reasons to file your taxes early this year.

TABLE OF CONTENTS

Every year, many taxpayers wait until the last minute to file their federal income tax returns. Despite this tendency, there are many reasons to file your taxes early. If you will receive a refund, you may want to submit your return as quickly as possible. Additionally, there are benefits to filing early for those taxpayers who have a balance due.

1. Faster tax refunds

Blonde woman taking a selfie

One of the most common reasons to file taxes early is to receive a faster tax refund. Filing your return electronically with direct deposit into your bank account is the fastest way to get your refund.

  • It can take up to several weeks longer for paper returns, so it is always better to e-file a return if you want to receive your refund quickly.

The IRS is scheduled to begin accepting e-filed returns on January 24. You can file your taxes for free with TurboTax Free Edition for Simple Tax Returns only.

2. Extra time to pay taxes you owe

American flag mailbox

If you owe a balance due to the IRS, you may still have a good reason to file your tax return as soon as you can. If you submit your return in the middle of January, you do not have to pay taxes you owe until the filing deadline.  Preparing your Form 1040 early will give you time to arrange your payment. This extra time is particularly helpful to taxpayers who need to find out exactly how much they will owe the IRS.

3. Obtaining financial information

Senior woman using laptop computer

If you are expecting a big life change such as purchasing a house or returning to college, preparing your tax return early can help you obtain essential information. College students use the information from Form 1040 to apply for financial aid, while prospective homebuyers often have to show their completed tax return as proof of their household income. Getting your tax return done early—whether you owe money or expect a refund—gives you a head start on the paperwork you will need for these processes.

4. Avoiding a tax extension

Man using a laptop on a couch

Filing your tax return early may help eliminate the need to file an extension. Extensions of time are often required as a result of disorganization more than financial need. Some people who wait until the last minute to file their returns simply need time to look for additional deductions or gather receipts.

  • Push the process too close to the filing deadline, and you increase the likelihood that you will need the help of a tax professional to help you sort your finances and complete your return.
  • Even worse, if you file an extension but don’t pay what you owe if you have a balance due, the IRS will charge you interest and penalties on the outstanding tax debt until it is paid in full.
  • Preparing your tax return early in the year helps you avoid this situation.

5. Preventing tax return identity theft

door with multiple padlocks

Once someone gets access to your Social Security number, they have everything necessary to file a tax return in your name. The purpose of a fraudulent tax return is, obviously, not to pay your back taxes, but to pocket your tax refund. This scam occurs early in the tax season, well before most taxpayers file. Take every possible precaution to keep your SSN secret, and if possible, file your taxes early.

[This part is a bit of an advertisement. I happen to use the H&R Block software instead but it’s a preference, not a quality issue.] Remember, with TurboTax, we’ll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation.

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