5 reasons to file your taxes early

5 Benefits of Filing Your Taxes Early

5 reasons to file your taxes early

Whether it’s scrambling to finish that college term paper the night before it’s due or running around the mall looking for Aunt Carol’s present on Christmas Eve, we’ve all been guilty of procrastinating important tasks at some point.   

But there’s one thing we love putting off until the last minute more than anything else: Paying our taxes.

During the 2019 tax season, nearly 34 million taxpayers waited until the week before or the week of Tax Day to file their tax returns. That’s about the same number of tax returns filed in the entire month of March.1 No wonder we’re all stressed during tax season!  

But with over 70% of taxpayers receiving an income tax refund each year of nearly $2,800 on average, we can’t think of a good reason you’d want to delay filing your taxes.2

And that’s not the only benefit of early filing! Here are a few more reasons to get your act together early this tax season.

1. Early filers eliminate tax deadline stress

According to a recent TaxSlayer survey, a majority of taxpayers (52%) are stressed over filing their taxes.3 No shocker there! Any time you face an unpleasant task, it’s best to get it the way as soon as possible. Income taxes are no different. You have to fill out the forms and you have to file them, so just grit your teeth and get it over with.

Taxes shouldn't be this complicated. Let us help.

Give yourself a fake deadline—well ahead of the actual Tax Day deadline—to get your taxes taken care of. Once your return is filed, give yourself a small reward for being so efficient and responsible. Go to the movies. Or have a dance party in your living room. You’ve earned it! Then relax while everyone else stresses out about getting their taxes done on time.

 Once your return is filed, give yourself a small reward for being so efficient and responsible.

2. Early filers average larger refunds

Now listen, a tax refund is not free money. Getting a large refund from the IRS just means you’ve been lending Uncle Sam your money (without interest) all year long—he’s just returning what’s already yours!

If you get a refund that’s more than a few hundred dollars, you probably need to work with a tax pro and your HR department to adjust your withholdings on your W-2 form. Watching those larger paychecks hit your bank account will make you feel you got a raise!

That being said, if the government does owe you money this year, you want to make sure you’re getting every dollar that’s rightfully yours—and filing early can help you do that. IRS data shows that taxpayers who file by late February get significantly larger refunds than those who file later—around $400 on average.4,5

Obviously, if you know you’re getting a refund, you’re more ly to file sooner, and that could be part of the reason early filers enjoy larger refunds.

But another reason is that the sooner you start on your taxes, the more opportunity you have to make sure you’re claiming all the tax deductions and tax credits you’re eligible for, which takes more time and documentation than claiming the standard deduction.

3. Early filers can protect their refunds from identity thieves

There you are, just wrapping up your tax return and about to file it in . . . but it’s rejected. That’s because a tax return using your Social Security number has already been filed, and your heart sinks into your stomach as you realize you’re now a victim of tax refund fraud.

And it happens more often than you think. According to the Government Accountability Office (GAO), the IRS estimated that online tax fraudsters tried to steal at least $12.2 billion through identity theft tax refund fraud in 2016. And while the IRS was able to thwart most of those robbery attempts, $1.6 billion still ended up in the hands of these thieves.6  

Filing early may not completely eliminate the threat of identity theft, but it can protect your refund. If thieves file a return using your Social Security number before you do, the IRS will kick out your return since their records show you’ve already been paid. It can take months to clear up the mess with the IRS and finally receive your refund.

Filing early may not completely eliminate the threat of identity theft, but it can protect your refund.

4. Early filers with a tax bill have time to make a plan

When you’re facing an income tax bill instead of a refund, it’s natural to put off filing as long as possible. But if you go ahead and fill out your tax forms and file them, you’ll know exactly how much you have to pay—and you won’t have to pay in full until Tax Day.

The more time you have to come up with the money, the less ly you are to bust your budget or drain your emergency fund. So, don’t spend the first part of the year with your head in the sand. Get the facts about what you owe, make your plan, and get that tax bill the way.

You can save time and reduce hassle by gathering the right paperwork the first time around. Not sure what you’ll need to have in hand to file your taxes? Download your free tax preparation checklist.

5. Early filers face less competition for access to their tax professional

You may have found out the hard way that it’s tough to get on a good tax pro’s schedule during crunch time. In fact, if you need a pro and haven’t set an appointment by at least four weeks out from Tax Day, you may have to file an extension.

On top of that, some tax pros will charge more to complete your taxes as the filing deadline approaches. The best way to avoid all that hassle is to get an appointment with your advisor as soon as possible.

Now, if you have a relatively simple tax return and want to try filing yoru taxes on your own, check out RamseySmartTax. If your taxes are more complicated, however, a pro may be your best bet.

Don’t have a tax pro or want to work with a new one this year? We can put you in touch with a tax advisor Dave recommends in your area today!

Источник: https://www.daveramsey.com/blog/benefits-of-filing-taxes-early

Why You Should File Your Taxes Early in 2019

5 reasons to file your taxes early

Whether you prepare and file your taxes yourself, or pay someone else to do them for you, doing your income taxes is probably not one of your favorite chores.

Knowing you have a tax refund coming can make the whole process somewhat easier, but gathering your paperwork and ensuring the forms are completed correctly can still be both time-consuming and stressful.

Avoid IRS anxiety and do the work to file taxes early. There’s nothing being ahead of the game when it comes to filing your taxes.

How early can you file taxes?

The IRS designated January 28, 2019, as the start of tax season. That’s when the IRS began processing tax returns. Although there was a federal government shutdown early this year, the agency said it will provide refunds to taxpayers as scheduled.

The IRS allows you to file your tax return earlier than its start date for tax season. You don’t have to wait. But processing returns begins at the official start date.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019. There are exceptions:

  • Taxpayers in Maine and Massachusetts have until April 17 to file their returns because of the Patriots’ Day holiday.
  • Taxpayers in the District of Columbia have until April 17, in observance of the Emancipation Day holiday.

Software companies and tax professionals accepted and prepared tax returns before January 28. But they submit the returns on or after the opening day of tax season.

A good reason to file your taxes early

Even if there’s no tax refund to be found at the end of your tax-filing rainbow in 2019, there are still very good reasons to file your income taxes as soon as you can, this and every tax season — to try to avoid tax-refund identity theft.

Tax-refund identity theft is when someone files a tax return using your personal information in an attempt to get a tax refund. Consider this: Identity thieves only need your name, Social Security number, and your birthdate to file a tax return in your name.

The Internal Revenue Service says, in effect, the best defense is a good offense: The best thing to do is file early in the tax season — if you can — to get your refund before identity thieves try to.

Your information is already out there, exposed. And criminals can use that already exposed information to commit identity theft and financial fraud.

Your filing early may not stop an identity thief from attempting to file a fraudulent tax return using your information, but in this case, first come, first served.

By filing first, your tax return will ly be processed first, and it’ll be the identity thief, not you, who receives the IRS notice that a return has already been filed using your personal information.

It’s really in your best interest to consider filing your taxes early.

How to file taxes early: 3 steps

Filing your taxes early — or not so early — includes preparing your tax documents, doing your tax return, and filing your tax return. It can feel a lot of work, but the IRS offers support online, including explaining changes in the tax code.

Here are the three main steps to filing your tax return.

  1. Prepping. Call it the gathering phase. You assemble all the documents and records you’ll need to file your federal and state tax returns. This includes your W-2s (if you have a job) and other forms such as those that document investment income or mortgage interest paid. If you itemize deductions, you’ll also gather receipts for deductible expenses, including charitable contributions or healthcare expenses.
  2. Doing. You might decide to hire a tax professional or an online service to help complete your tax return The IRS offers some guidance to find a paid preparer or e-file provider. Otherwise, it’s time to hunker down with a calculator, crunch the numbers, and fill in the blanks.
  3. Filing. The IRS recommends electronic filing as the easiest way to file a complete and accurate tax return. To do this, you may be able to use Free File on the IRS website or commercial tax preparation software. If you owe the IRS money, you can also pay electronically. You can also send your tax return to the IRS by mail. Just be sure to have it postmarked on or before the tax deadline.

Other reasons to file taxes early

Are there other reasons you may want to file early? Yes, but they may not be as compelling as avoiding tax-related identity theft. Still, they’re worth considering:

  • The sooner you file, the sooner you’re ly to receive your tax refund, if you have one coming. Again, the IRS says the fastest and safest way to get your tax refund is to file your return electronically with IRS e-File and have your refund directly deposited into your financial account.
  • Even if you owe taxes, preparing and filing your taxes early will help you determine how much you owe. And guess what? Filing early doesn’t mean you have to pay your taxes when you file. You still have until the usual mid-April tax-filing deadline. The time between when you prepare your taxes and mid-April may help you figure out how to work that tax payment into your budget. (Good luck!) When you send payment after filing, be sure to complete and include form 1040V payment voucher — a statement you send with your check or money order for any balance due on the “Amount you owe” line of your Form 1040 or Form 1040-NR.
  • Some lenders — for mortgages or student financial aid, for example — may want to see a completed tax return as proof of income. If you have such an upcoming item on your calendar, you have one more reason to file early — so you’ll have your completed tax return ready for review as part of the application process.

The IRS says it can sometimes take 120 days to 180 days to resolve tax-related identity theft cases. That’s four to six months — a long wait if you are expecting to receive a tax refund. So, if filing early means you could get in the IRS queue before an identity thief who has your Social Security number, that wait is one more reason to do so.

Tax season is challenging enough, and could be worse if you become a victim of tax-related identity theft.

Identity thieves may already have your exposed personal information from recent data breaches. They can use it to file a tax return using your Social Security number, name, and date of birth to obtain a fraudulent tax return. That could make tax season more taxing.

Tax-related phishing and malware attacks are two additional risks you could encounter during tax season.

Phishing scams are on the rise. The IRS noted a 60% increase in bogus email schemes in 2018. The bogus emails were often designed to steal money or tax data.

In other cases, fraudsters send bogus tax-related emails with attached files. If you click on the attachment, it could install malware on your device.

Tips for staying safe

Here are some tips to help protect against tax scams.

  • When initially contacting a taxpayer, the IRS will generally send several letters through regular U.S. Postal Service mail. Beware of a house visit, phone call, or email from someone who says they’re with the IRS. It could be a scam.
  • Use a secure, private Wi-Fi network if you’re e-filing.
  • File early to beat out identity thieves who might file with your information.
  • Beware of emails from the Taxpayer Advocacy Panel (TAP). These are a phishing scam that was prevalent in 2018. Ignore any tax payment demands for gift cards or other specific payment type.
  • Shred all documents with sensitive information, such as your date of birth or Social Security number.
  • Regularly check your credit report for suspicious activity, a possible indication of identity theft.

Scam watch: things the IRS would never do

Fraudsters sometimes impersonate the IRS to trick taxpayers. Here are things the IRS would never do — common tactics for scam artists.

  • Demand payment in a specific way (credit, cash, etc.)
  • Ask for credit or debit card numbers over the phone.
  • Demand payment without giving you time to review the owed amount.
  • Make threats about involving the police or arresting you.

You may be unaware that you’re a victim of tax-related identity theft until you try to file your taxes and the IRS tells you something’s wrong.

It’s smart to respond immediately to any legitimate IRS notice. And check your credit reports for other fraudulent activity. Remember, filing early can help keep you a step ahead of tax-related identity theft.

Glossary

Early tax filing. Filing your tax return before the federal tax deadline, usually April 15, and often weeks or months in advance of that date.

Late-payment penalties. A financial penalty you’ll be required to pay if you don’t pay the taxes you owe by the original tax-filing deadline.

Tax day. The day your income tax return is due to be submitted to the IRS. Tax day is usually April 15 or the business day after April 15, with a few exceptions for holidays.

Tax refund. The difference between taxes paid and taxes owed. Tax-related identity thieves may try to fraudulently claim a refund using your Social Security number.

Tax-related identity theft. Tax-related identity theft occurs when someone uses your stolen Social Security number to receive a fraudulent tax refund. You may not discover you’re a victim of this crime until you try to file your legitimate tax return online or by mail and the Internal Revenue Service lets you know a return has already been filed in your name.

Источник: https://www.lifelock.com/learn-fraud-file-taxes-early.html

5 Reasons to File Your Taxes Early

5 reasons to file your taxes early

For many of us, putting off our taxes is as natural as avoiding your next root canal. 

But believe it or not, filing your taxes early may actually take some of the sting the upcoming tax season, making it a little easier and lot less painful to deal with your federal tax return. 

Here are 5 reasons to file your taxes early this year:

1. You’ll get your refund faster

Looking to make some headway on those post-holiday credit card bills? Have a vacation coming up and need some extra cash now? 

Filing your taxes early not only puts that refund check in your hands months in advance, but also provides the extra funds you need to catch up on expenses, buy that phone you’ve had your eye on or add to that vacation nest egg sooner than you thought possible. An early refund is a bonus check from the IRS, providing a boost to your bank account and a great way to get your new year started right.

When does tax season start? 

Tax season officially begins on Monday, January 27, 2020. This is the earliest day you can file your federal tax return.

2. You’re ly to get a bigger refund

File your income tax early and you’ll not only get your money back faster; you’re ly to get more than you expected. 

Recent data has shown that taxpayers who file before or by late February receive much larger refunds than those that wait to file—an average of $400 more than people who wait until the April deadline! While there’s no guarantee you’ll get that much more money, filing early could be exactly what you need to beef up that refund check and add a little more to the bundle in your wallet.

The sooner you start preparing your taxes, the more chances you have to claim every tax credit and deduction you’re qualified for, ensuring you get the refund your family deserves.

Is there any penalty for filing early?

Not at all! Once the IRS starts accepting federal returns, there’s no penalty or fee for filing early and getting the ball rolling. 

3. You’ll have extra time to pay the taxes you owe

If you do owe money to the IRS, taking steps to file your taxes early can provide valuable extra time to organize your finances and get ready to pay down your balance. Because taxpayers aren’t required to pay their federal taxes until the April filing deadline, you can submit your return early and give yourself more time to arrange your future payment. 

Of course, people are more inclined to put off filing their taxes for as long as possible when they know they owe money. But if you take the initiative and prepare your taxes now instead of later, you’ll have a better sense of what you’ll need to pay and much more time to get things in order before the tax bill is due. 

In other words, getting the facts now on what you owe can help prevent unexpected surprises down the road, saving you from the anguish and last-second scramble that comes when the taxman knocks on your door.

How can you file taxes early?

Filing your return early is done much the same way as filing by the deadline. As long as you have the necessary forms and can provide the IRS accurate reporting of your income, you may begin the 2020 tax filing process. 

Forms commonly needed to file your taxes include:

  • W2s (employer-provided income info)
  • 1099s (self-employment, retirement and investment income records)
  • Form 1040 (used to report your income and file your return)

4. You can prevent identity theft

It’s Tax Day. You’ve just finished your tax return and clicked on submit when… thud. It’s rejected. As it turns out, someone’s already filed a return using YOUR Social Security Number (SSN), making you just another victim of identify theft and tax refund fraud. 

The IRS estimates that online refund thieves try to steal billions in taxpayer money each year. And while the government is able to thwart much of that theft, a healthy chunk (more than $1 billion) ends up in fraudster’s pockets, putting your hard-earned money up for grabs and potentially in the hands of online criminals. 

When you file your taxes early, you’re reducing the odds an identity thief can use your SSN before you do, protecting your return in the process. Not only that, but you’re avoiding a potential mess with the IRS that can take months or longer to clear up—as well as to get the refund you’re rightfully owed. 

How can I protect myself against tax refund fraud?

Filing your return early is just one way you may lower your risk of refund fraud. Other methods for protecting your personal info include:

  • Shredding documents and mail containing your SSN
  • Never using your SSN as an online password
  • Avoid giving your info out for any reason

5. You can eliminate stress

Tax time is stressful enough. But when you wait until the last minute to get forms ready and sort through deductions, it often only adds to that frustration and makes filing your return much harder than it should be. 

Beginning the process early not only gets you your refund quicker or allows you to better prepare for your upcoming tax bill; it also eliminates the need to rush toward the finish line, giving you time to learn each tax advantage and how best to maximize your federal return.  

And once you know your return is filed, you can rest easy knowing you’ve beat the deadline and can now focus on what’s really important: living your life.

Can you file taxes early without a W2?

It’s always advisable to wait for your W-2s before filing your federal taxes. But if you’re looking to file early and your forms haven’t yet shown up, you may be able to file using IRS Form 4852. 

Looking to file early? To get your return started on the right foot, visit your local tax Liberty Tax® pro today. 

Get the latest on #taxprep and #taxfiling early on our and . 

Источник: https://www.libertytax.com/tax-lounge/-reasons-to-file-your-taxes-early/

5 reasons to file your taxes early

5 reasons to file your taxes early

Your income tax return is due to Uncle Sam by April 15, but there are a number of benefits for filing your taxes early.

In the first full week of tax season (ending January 31, 2020), the IRS received 15,777,000 individual income tax returns, the agency reported.

Not in a rush? Here are five reasons why you should file your 2020 tax return as soon as possible.

A faster refund (if you’re owed one)

Want to claim your refund quickly? The IRS issues most refunds in less than 21 days, but filing in late March or April can result in longer wait times, so it’s worth getting in line early. You can track the status of your tax return, from receipt to completion, using the IRS’ Where's My Refund? tool, which is also available on the IRS2Go mobile app.

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Moreover, the sooner you get your refund, the sooner you can invest the money and start earning interest—or “you could pay down credit card debt, student loans, or save it for a rainy day,” said Lisa Greene-Lewis, CPA and tax expert at TurboTax.

Lower risk of becoming a victim of tax fraud

Twelve percent of identity theft complaints are the result of tax fraud, according to the Insurance Information Institute. Tax-related identity theft occurs when someone uses your personal information, including your Social Security number, to file a tax return in your name and claim your refund.

Tax fraud issues can take months or longer to clear up. The upshot? Filing your taxes early can help protect your refund and identity from fraudsters, since it gives online crooks less time to step in and falsely file return in your name. “As soon as taxpayers file, it blocks that Social Security number from being used again,” explained Mark Steber, chief tax officer at Jackson Hewitt.

Less stress

The majority (52 percent) of taxpayers think that the filing process is stressful, a recent TaxSlayer.com survey found. Scrambling at the eleventh hour to get your taxes done by the deadline can make things worse. Filing your return early will take some stress off—and give you more time to address any issues, such as catching mistakes on your W-2 or 1099 forms.

Another factor to consider? If you procrastinate and put yourself under pressure, you could miss tax deductions or credits that you’re entitled to, Greene-Lewis said: “People who wait until the last minute to do their taxes tend to rush and may leave out information.”

Tax preparers are less busy

More than 83 million taxpayers paid someone to prepare their federal tax return in 2017, according to the IRS says.

Professional tax preparers, such as tax attorneys, certified public accountants (CPAs), and IRS enrolled agents, get busier as they get closer to the tax deadline.

So, if you’re using a professional to prepare your tax return, tapping the person in February or March can get you better customer service, since fewer clients will be vying for their attention.

Don’t have a tax preparer? Using an online tax filing service may be a good move. After all, “there’s no reason to stand in line at a tax store when you can do your taxes from the comfort of your own home and even on the go,” Greene-Lewis pointed out.

More time to devise a payment plan (if you owe money)

Most Americans get a tax refund, because most workers pay their income taxes every two weeks through automatic federal and state withholding from their paycheck. However, you could get hit with a tax bill if you haven’t updated your Form W-4, a document used to determine your income tax withholding.

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If you owe money, you’ll want to pay it off before the tax deadline, since the IRS can tack on penalty fees and interest to a late balance until it’s paid in full.

Short on cash? It may make sense to take out a personal loan to pay your tax bill. Interest rates for personal loans typically range from about 5 percent to 36 percent, according to ValuePenguin.

Consult a mortgage lender or financial advisor to see if a personal loan makes sense for you.

Have student loans? Don’t miss this tax deduction

If you have student loans, you may be eligible to subtract up to $2,500 in the interest you paid on your loans from your taxable income, depending on how much money you made in 2019. Also, claiming a student loan interest tax deduction could move you into a lower tax bracket.

Источник: https://www.foxbusiness.com/money/file-taxes-early-reasons-why

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