By: Gerelyn Terzo of Sharemoney
When it comes to tax season, it’s easy to procrastinate. After all, accounting can be a tedious process, not to mention if you happen to owe money to Uncle Sam, in which case you might actually dread doing taxes.
However, what if we told you that the sooner you complete your tax filing, the better off you’ll be? There are perks to filing early that you could be missing out on by delaying the inevitable. Let’s explore them.
- Avoid Delays
Regardless of your feelings about the IRS, it’s hard to deny that they are not the most efficient government division. As of 2022, the IRS had a backlog of tens of millions of personal tax returns, leaving people in the dark about their returns for months on end. While the agency has since added hundreds of new agents to help move things along, they are still going through these returns manually. It’s safe to say it could still take a while before things are running smoothly.
This is one reason that should motivate you to file your personal taxes early, especially if you’re owed money by Uncle Sam. Not only that, but try and file electronically if you can so you don’t get caught in the wave of paper filings. The sooner your return is processed, the sooner you can receive your refund via direct deposit, or snail mail if you file manually.
Before you submit, check your work and make sure you signed on every dotted line. Incorrect paperwork will likely trigger delays in the processing of your returns.
- Eliminate Unnecessary Anxiety
Taxes can be stressful, we get it. This is yet another reason to propel you to file your personal taxes early. More than half of Americans experience stress over the thought of filing their tax returns, including Millennials. A report by United Way Worldwide states that nearly three-quarters of millennials find themselves stressing over possibly having errors on their returns or not getting what’s owed to them.
Even if you’re dreading it, just remember this: The two things that are assured in life are death and taxes. This way, you’ll force yourself to confront the task. One way to help yourself to file early is to give yourself your own deadline, one that is before the April 15 date that the IRS sets (April 18 this year due to the weekend and the Emancipation Day holiday).
In addition to a deadline, also plan to reward yourself for meeting this obligation as an incentive to get it done. As long as you don’t spend your refund before it arrives, a reward could be just the motivation you need to file your taxes early.
- Bigger Returns
If you’re not motivated by now to file your personal taxes early, this reason might do the trick. Taxpayers who file early are more likely to receive a bigger refund than those who wait. In fact, on average, early filers see $400 more in their return checks vs. later filers, according to IRS data.
One reason could simply be that people who file early are doing so because they know they have money coming back to them, and the procrastinators are the ones who might owe. Nevertheless, taking advantage of every tax incentive requires time and patience. The last thing you want to do is rush the process and possibly overlook a tax break that could have been yours.
- Professional Support & Cybersecurity
The sooner you file your personal taxes, the greater your chances of having access to a tax professional. If you are looking for an expert to help you sort through your earnings, deductions, and capital gains/losses, you’ll want to act sooner than later. This is the busy season for accountants, and their calendars fill up rather quickly. The last thing you want to do is be left on the sidelines if your taxes are too complex for you to do alone.
Cybersecurity is another reason why you should file your taxes early. It’s no secret that there are identity thieves out there. These bad actors could be looking to impersonate tax filers in order to steal any returns that would otherwise be going to the filer. The dark web is a stomping ground for this type of nefarious activity, and all the thieves need is your Social Security number.
It happens more than you probably think. Scammers attempted to abscond with $26 billion in tax refund-related frauds in the five years leading up to 2019. Fortunately, the IRS intercepted most of these attempts. Nevertheless, it proves that tax filers expecting a refund have a target on their backs.
By filing early, you can outsmart these criminals. Once the IRS sees that a filing attached to your Social Security number has been submitted, they’ll reject any subsequent filings using the same identity. It might not be a foolproof way to stop identity theft, but it is one line of defense in the process.
- Avoid Penalties
Of course, avoiding penalties is yet another reason to file your personal taxes early. The last thing you want to do is have the government heap on fees and penalties for a filing that comes in after the due date. That’s money that you could be directed elsewhere, such as paying down debt or helping a family member who lives abroad.
The penalty for filing late is 5% of taxes owed for each month in which a return is late. If you have no choice but to submit your taxes late, be sure and file for an extension so you avoid any of those unnecessary charges. In 2023, the deadline for taxpayers who have filed for an extension is Oct. 16.
Surely one of these reasons should be enough of a catalyst to encourage you to file your personal taxes early. Once you do, it will make it easier in the coming years to follow a similar pattern. Soon you might even look forward to tackling your taxes if only to put them behind you for the rest of the year.