4 Benefits to Filing Taxes Early

TaxAct

Getting a head start on federal tax filing may be more beneficial than most people realize - here's why.

1. You’ll get your tax refund faster.

If you want your tax refund in your bank account as soon as possible, filing early is good practice. Getting a jumpstart on filing your tax return means you will be one of the first in line to receive your tax refund. Choosing to e-file and receive your refund via direct deposit is the fastest way to receive your money once the IRS starts processing returns.

When the government owes you money, you might as well get it as soon as you can, right? The sooner that cash is in your pocket, the more time you have to make good use of it. For instance, you could put that extra tax refund money toward paying off a credit card bill, saving you the need to continue paying interest on outstanding debt.

2. You’ll have more time to get organized.

Let’s face it: most of us aren’t as organized as we would like to be when it comes to filing our taxes. The nice thing about online tax software is that you can start working on your federal and state returns early and then update them as you receive the necessary tax forms, like your W-2 form or 1099 forms.

For example, let’s say you wait until the last minute to file your federal income tax return. In the middle of filing, you realize you are missing some essential forms, and now you’re running out of time to find the necessary paperwork.

Similarly, the longer you wait to file, the harder it is to remember which tax-deductible expenses and potential tax credits you could claim throughout the year. Recalling what happened over a year ago can be difficult if you don’t keep adequate records. It’s best to file early while the previous year is still fresh in your mind — especially if you are someone who needs to record itemized deductions.

Giving yourself that extra time to file helps you avoid the need to file a tax extension and gives you a better chance at filing a more complete tax return (which could lead to a bigger tax refund!).

3. You’ll have extra time to pay your tax bill.

If you find yourself owing money to the IRS, filing your return early gives you more time to pay your tax bill. You have until the tax deadline (April 15, 2024) to pay the amount due. If you’re on a tight budget and expecting a tax bill, filing early gives you more time to plan for that payment, so you don’t owe late penalties and interest on any outstanding tax debt.

It’s also worth noting the IRS offers different repayment options for American families who cannot afford to pay their entire tax balance out of pocket. If needed, you can apply for a payment plan with the IRS but will likely still have to pay late fees. File as early as you can to allow time to budget for a potential bill.

4. You’ll lessen your chances of tax fraud.

Unfortunately, tax fraud is a common form of identity theft. If someone gets ahold of your Social Security number (SSN), they have everything they need to file a federal tax return in your name with the intent to steal your tax refund.

Filing your taxes early lessens the odds of tax fraud. Once you have filed your income tax return using your SSN, the IRS will automatically reject any other tax returns that try to file using your SSN. The quicker you file your return with the IRS, the less time a criminal has to file a fake tax return in your name.

When can I start filing?

Once you have all the tax forms you need, consider filing as early as you can. Not only will this help ensure you receive your tax refund faster, but it can also give you more time to plan for and pay potential tax bills and serve as a shield against tax fraud, reducing the window for fraudulent filings using your personal information.

All set? TaxAct® is here to help you get started whenever you’re ready.

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This article is for informational purposes only and not legal or financial advice.

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