Nobody likes filing taxes. It's a boring, tedious task that might leave you with an unexpected bill, so it makes sense that people want to put it off as long as possible. However, like most unpleasant tasks, filing your taxes early can result in some great benefits.
Filing Taxes Early Removes the Stress of the Tax Deadline
Having a deadline is stressful. What's even more stressful is a deadline with steep penalties if you miss it, like the kind that comes due every April 15. What almost no one talks about, though, is that the sooner you get the task done, the sooner you're free of the clutches of the deadline.
Set your own deadline, well before April. When you're done, reward yourself. Go out to dinner, buy that new shirt you've been eyeing for weeks or even host a family/friends game night.
Filing Your Taxes Early May Give You a Larger Refund
According to the IRS data, people who file their taxes by late February tend to get larger refunds than people who file later--about $400 more on average. Now, there are several reasons why people who file early tend to get larger refunds. For instance, this could be because people who know they're getting a refund are more likely to file sooner. However, another reason might be that the sooner you get started on your tax returns, the more time you have to make sure you're claiming all the tax deductions and credits you're eligible for, instead of rushing through your taxes and claiming the standard deduction.
While we're on the topic of larger tax refunds, it's worth pointing out that a tax refund is not free money. Getting a large refund from the IRS just means that the government is paying you back on the money you let them borrow, interest free, over the last year.
If you get a refund that's more than a couple of hundred dollars, you should probably work with a tax advisor and your Human Resources department at work to adjust your with holdings on your W-2 form. Watching larger paychecks hit your bank account will make you feel like you got a really big raise.
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Filing Early Gives You Better Protection From Identity Thieves
Tax refund fraud happens more often than you might think. According to the Government Accountability Office, tax fraudsters tried to steal at least $12.2 billion. To the IRS' credit, they were able to shut down most of these attempts, but thieves still managed to get their hands on $1.6 billion in tax refunds.
Filing early won't completely protect you from identity theft, but it can at least protect your refund. If identity thieves can file a return using your social security number before you do, it can take months to sort matters out with the IRS and get the refund you deserve.
Filing Your Taxes Early Gives You More Time to Pay Your Tax Bill
Nobody likes bad news, and owing additional income tax is definitely bad news. If you know you're going to owe income tax, it's natural to put off filing as long as possible. However, if you can ignore the urge to avoid bad news and file your taxes early, you'll know exactly how much you'll have to pay--and even better, you won't have to pay the full amount until the April filing deadline.
Tax Prep Professionals Have More Time Earlier in the Tax Season
The more time you have to come up with the money, the less likely you are to bust your budget or drain your emergency fund. Get the facts about what you owe, make your plan, and get that tax bill out of the way.
You may have found out the hard way that getting on a tax pro's schedule gets tougher the closer you get to April 15. In fact, if you haven’t set an appointment with a pro by the middle of March, you'll probably have to do your taxes yourself or file an extension.
Want some more incentive to book an appointment with a tax pro early? 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 a tax advisor as soon as possible.
If you choose to complete your taxes on your own, First Alliance Credit Union members receive discounts on Turbo Tax and H&R Block products.
Manage Your Tax Refund With First Alliance Credit Union
Doing your taxes is a lot like doing homework--it's not fun, but the sooner you can do it, the better off you'll be.
Once you have your tax return filed, maximize your refund with First Alliance Credit Union. Get your tax refund even faster with direct deposit, then make your refund earn even more money for you by using it to open a Certificate of Deposit (CD).
This is your year. Make your tax refund work for you.