Tax season is here. Although you have until April 18 to file their returns this year, getting your taxes finished early can help maximize your return and avoid potential stress that can arise from filing later. Here are some stress-free tips to make sure you get everything you’re owed.
Early Bird Gets the Biggest Refund
IRS statistics show that taxpayers who file by mid-February receive a refund that is an average of $450 bigger than that of those who file later. This may be because most early filers already know they’re going to get a refund and file quickly to receive it as soon as possible.
But it’s more likely the early filers get bigger returns because they have more time to claim each and every deduction that they’re eligible for. According to the IRS, 68 percent of taxpayers claim the standard deduction on their returns. However, every year there are $1 billion of unclaimed tax refunds because millions of eligible filers don’t take the time to itemize their deductions.
Itemizing deductions requires more documentation and more time than taking the standard deduction, but if you start the tax filing process early, you’ll have plenty of time to maximize your refund.
Regardless of what kind of deduction you take, make sure you have all the required forms (W2’s, 1099’s, and more) and documents (receipts, etc.) so you’re able to file as quickly and easily as possible.
Protect Your Identity
Filing early can help protect your identity from thieves. The Federal Trade Commission reports that tax-related identity theft complaints rose from comprising 15 to 43 percent of all identity theft complaints in the last three years.
Thieves can file a return using your Social Security number before you do, which leave your properly filed return kicked out because IRS records will show that you’ve already filed. The IRS will help you resolve any issues, but the resolution can take months and you will not be eligible to receive your refund during its investigation.
Also, remember that the IRS communicates with you only in writing, so beware of scammers who call you on the phone that claim they represent tax officials and ask for your personal information.
Unfortunately, filing early does not eliminate all threat of identity theft, but it can help keep you protected. Don’t rush through your return just to try and stave off thieves. Avoid mistakes that cost you refund dollars by taking your time and checking your return before filing.
If You Owe Money to the Gov’t, Filing Early Affords You More Time to Pay
If you know you owe some taxes to the IRS, you might be tempted to put off filing your return. But filing early can still help you reduce stress about your payment. That is because if you file early, you don’t need to send your payment until the April tax deadline. This gives you time to budget so you are less likely to tap into savings or an emergency fund to cover what you owe.
Whether you owe some taxes or are expecting a big refund, getting your taxes done can be an unpleasant task. But by getting them done early, you can go back to the rest of your life with one less thing to worry about, and you might even get a bigger refund by taking more time to explore your financial documents prior to itemizing deductions.