4 Benefits to Filing Taxes Early
There’s nothing wrong with filing taxes early. In fact, getting a head start on federal tax filing may be more beneficial than most people realize.
Officially, it doesn’t matter how early taxpayers file their tax return if you meet the IRS original or extended tax deadline. For tax year 2022, Tax Day is April 18, 2023.
But even though it’s not required, it’s almost always more beneficial to file your taxes early. Here are some top reasons why.
1. You’ll get your tax refund faster.
If you want your tax refund in your bank account as soon as possible, it’s good practice to file early. 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 you can start filing your federal and state returns early, and then continue updating them as you receive the necessary tax forms like your W-2 or 1099s.
As an example, let’s say you wait to file your federal income tax return until the last minute. In the middle of filing, you realize you are missing some essential forms, and now you’re running out of time to find the paperwork you need.
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. If you didn’t keep adequate records, it can be difficult to recall what happened over a year ago. 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 possibly 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 18, 2023) to pay the amount due. If you’re on a tight budget and are expecting a tax bill, filing early gives you more time to plan for that payment so you don’t end up owing late penalties and interest on any outstanding tax debt.
It’s also worth noting the IRS offers a variety of different repayment options for American families who cannot afford to pay their full tax balance out of pocket. If needed, filers 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, 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. 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 taxes for 2022?
You can e-file your tax return online with TaxAct as early as Jan. 3. However, the IRS will not officially start accepting and processing income tax returns until Jan. 24, 2023.
While the IRS is making better progress than last year, the department is still dealing with a backlog of prior year tax returns waiting to be processed. The large majority of those waiting to be processed are paper filed returns, which makes e-filing your return this year even more important if you want to receive your refund in a timely fashion.