Reasons to File Your Taxes Early can’t be stressed enough as we usher in the new year. The first snowflakes have fallen, and the holiday decorations have been tucked away. As we settle into the new year, a familiar dread might begin to creep in for many Americans: tax season. While the official deadline to file your 2023 tax return isn’t until April 15, 2024, the IRS starts accepting returns as early as January 29th. Filing early is not just a suggestion; it’s a strategic move that can benefit you in numerous ways. Here are
Four compelling Reasons to File Your Taxes Early:
- Get Your Refund Sooner, Spend It Sooner
We all know a tax refund isn’t free money; it’s the excess tax you overpaid throughout the year that the IRS is returning to you. However, receiving that refund sooner rather than later can be a major relief, especially if you have bills piling up or big purchases on the horizon. According to the IRS, most refunds are issued within 21 days of filing, and opting for direct deposit can further expedite the process. But remember, if you claim the Earned Income Tax Credit, your refund will be held until February 27th, regardless of when you file. The Reasons to File Your Taxes Early start with financial flexibility.
- Prepare for the Worst (and Hope for the Best)
Not everyone gets a happy tax refund surprise. If you underpaid your taxes throughout the year, you might be facing a bill instead. Discovering this in February allows you more time to strategize and gather the necessary funds to avoid late payment penalties and interest charges. SecureSave data reveals that a staggering 63% of Americans lack the emergency funds to cover an unexpected $500 expense. Finding out you owe $1,000 in April could leave you scrambling, while February offers a buffer to explore options like a side hustle or a payment plan with the IRS. Reasons to File Your Taxes Early include financial preparedness.
- Outsmart the Tax Scammers
Tax season is prime time for fraudsters. In 2023 alone, the IRS flagged over 1 million returns for suspected identity theft. Filing early can actually help mitigate this risk. If a criminal attempts to file a fraudulent return in your name later, the IRS will likely flag it as a duplicate and reject it. However, if they beat you to the punch, you’ll be in for a bureaucratic headache, forced to report the fraud and navigate the process of rectifying your return. Protect yourself from fraud by embracing the Reasons to File Your Taxes Early.
- Maximize Deductions and Credits
Filing early allows you ample time to review and maximize your potential deductions and credits. By getting an early start, you can thoroughly evaluate your financial situation, ensuring you don’t miss out on valuable deductions that could lower your taxable income. Whether it’s education expenses, homeownership deductions, or other eligible credits, taking the time to research and claim them correctly can significantly impact your overall tax liability.
Gearing Up for an Early Filing Victory
While filing early offers numerous benefits, it’s crucial to ensure you have everything in order for an accurate and smooth process. Gather key documents like your W-2s (for salaried employees), 1099s (for freelance income and bank/brokerage earnings), and any documentation for deductions you plan to claim (like mortgage interest). Financial institutions typically send out 1099s by late January, but be mindful of potential amendments. Double-checking your forms for accuracy before submitting your return can save you the hassle of filing amendments later. An early filing victory starts with preparation.
In conclusion, conquering tax season doesn’t have to be a stressful ordeal. By taking advantage of the early filing window, you can potentially secure a faster refund, prepare for unexpected tax liabilities, maximize your deductions and credits, and even reduce your risk of falling victim to fraud. So, dust off your paperwork, grab a cup of coffee, and get ready to tackle your taxes early. You might just surprise yourself with how much smoother and less painful the process can be!
Bonus Tip: Don’t forget to explore free or low-cost tax filing options to save yourself some extra cash. Several online platforms and software packages cater to simple returns, making the process more accessible and affordable than ever. Reasons to File Your Taxes Early are not just suggestions; they are the keys to a successful and stress-free tax season.
Remember, filing early is a strategic move that can benefit you in numerous ways. So, ditch the procrastination and embrace the power of an early tax filing victory!