While filing taxes can be stressful and even unpleasant, filing early rather than waiting until the deadline can prove to be very beneficial.
Get Your Refund Quicker
For the vast number of Americans, tax season is a way to catch up on bills or to make special purchases. The quicker you receive your money, the quicker you can take care of business.
If you’re receiving a refund, filing early speeds up the process. When you use online tax preparation services, you will receive your refund in just a few weeks. Not only that, but rather than getting a check in the mail, you can have the refund deposited directly into your bank account.
Statistics show that men and women who file early also receive much larger refunds. Why? Part of this is because those filing early are not faced with the stress of getting taxes filed at the last minute, and often do a better job of filling out their forms. More deductions on your form means more money you receive.
Avoid Potential Identity Theft
Tax season is like Christmas for identity thieves. In 2013, the IRS paid out over $5.2 billion in fraudulent tax returns. Filing early is one way to beat identity thieves to the punch. Programs like TaxACT is the best tax software to guard against identity theft. By filing online, this eliminates the paper trail some thieves rely on. In addition, e-filing is encrypted and prevents hackers from stealing data when transmitted.
More Time to Plan When Money is Owed
If you already know that you’ll owe money to the IRS after filing, it is best to go ahead and file early in order to make a payment plan. When you file early, you have until April 15 to pay your taxes.
If you file in early February, you have over two months to come up with the money you owe. If paying the full amount is not possible, then filing early gives you the time needed to apply for a budget plan with the IRS. And keep in mind the IRS will work with you on this.
Allows for Early Filing of College Financial Aid
Do you have kids going to college in the fall? If so, you should definitely file early. Financial aid is determined in part by information provided on income tax returns, so filing early may help improve your chances of getting aid.
This is especially true if your financial situation has changed in the last year. For example, you made $60,000 from your job in 2014, but laid off in early 2015. You then had to take a job making $32,000 because of the job market. This significant change should be reflected by a tax return as soon as possible.
Proof of Income for a Big Purchase
Are you planning to buy your first home? Maybe you’re in the market for a new car. If so, filing your tax return early may help. When you apply for a home or auto loan, the information from your tax return will help determine whether you qualify. It shows proof of income, which shows that you’re able to repay the loan.
If you’re self-employed, two years worth of tax returns are required by loan agencies. It is easy to get a copy of your return. The best online tax filing programs like TurboTax offer easy printing of tax statements. You can even save the files in PDF format and email them to your loan agent.