Many taxpayers wait until the April deadline to file their tax returns, assuming there is little benefit to getting started sooner. But filing early can make tax season easier, help you plan for a tax bill, and give you more time to resolve unexpected issues.
Whether you expect a refund or owe money, preparing your return well before the deadline can put you in a better financial position. Here are five reasons to consider filing your taxes early this year.
1. Get Your Tax Refund Sooner
If you’re expecting a refund, filing early can help you receive your money sooner. The IRS generally processes electronically filed returns faster than paper returns, and choosing direct deposit is typically the quickest way to receive a refund.
The IRS says most refunds are issued within 21 days of receiving an electronically filed return, although some returns require additional review or corrections that can delay processing. Filing early doesn’t guarantee a faster refund, but it gives you a head start rather than waiting until the busiest part of tax season.
Once you’ve filed, you can check your refund status using the IRS’s Where’s My Refund? tool.
Pro tip: Make sure your bank account information is accurate and that you’ve received all the documents needed to prepare a complete return before submitting it.
2. Reduce the Risk of Tax-Related Identity Theft
Tax-related identity theft occurs when someone uses your personal information to submit a fraudulent tax return, potentially attempting to claim a refund in your name.
Filing early can help reduce the opportunity for someone else to file a return using your information first. However, early filing is not a guarantee against identity theft, and taxpayers should take additional precautions to protect their personal information.
Consider these steps:
- Use a reputable tax preparer or secure tax preparation software.
- Protect your Social Security number, financial records, and online account credentials.
- Be cautious of emails, texts, and phone calls impersonating the IRS.
- Consider requesting an IRS Identity Protection PIN (IP PIN), a six-digit number that helps prevent someone else from filing a federal tax return using your taxpayer identification number.
You can learn more about eligibility and enrollment through the IRS’s Identity Protection PIN program.
Filing early is one useful precaution, but protecting your information throughout the year is just as important.
3. Avoid Last-Minute Filing Problems and Penalties
Waiting until the last minute can turn a relatively straightforward tax return into a stressful scramble. Missing documents, incorrect information, and unexpected tax questions can all delay filing.
Starting early gives you time to gather the necessary paperwork, resolve discrepancies, and address complicated situations before the deadline.
This is particularly important if you have multiple income sources, own rental property, operate a business, received investment income, or experienced a major life change during the year.
Remember that an extension gives you more time to file, not more time to pay. For most individual federal income tax returns, any remaining tax owed is still due by the regular April deadline. Interest and applicable penalties may accrue on unpaid balances.
If you discover that you owe more than expected, filing early gives you time to estimate your liability and plan how to pay it.
4. Improve Your Financial Planning
Your tax return provides a clearer picture of your income, deductions, credits, and overall tax position. Having that information earlier can make it easier to plan for the months ahead.
If you’re expecting a refund, you can decide how to use the money—for example, building an emergency fund, paying down high-interest debt, or contributing to savings.
If you owe taxes, knowing the amount well in advance of the deadline gives you more time to prepare for the payment and explore available options if you cannot pay in full.
Early tax preparation can also help with larger financial decisions, such as purchasing a home, applying for a loan, or evaluating a business investment. Lenders may request tax returns or other financial documentation, so having your records organized can make those processes easier.
Filing early can also reveal opportunities to improve your tax strategy for the following year. If your return shows that you consistently owe a large balance or receive a much larger refund than expected, you may want to revisit your withholding or estimated tax payments.
5. Reduce Stress and Give Yourself Time to Review
Tax preparation is rarely easier when you’re rushing. Waiting until April can leave you trying to track down missing documents, answer questions from your accountant, and resolve filing issues all at once.
Starting early gives you more time to review your return for accuracy. You can check that income has been reported correctly, confirm that eligible deductions and credits have been considered, and address any questions before submitting the return.
It also gives you a chance to correct missing or inaccurate information before it creates a larger problem. For example, you may need to contact an employer about an incorrect tax form or obtain additional records to substantiate a business expense.
If you work with a CPA, providing your documents early can make the process more manageable for both you and your tax professional. It also leaves more time to discuss tax-saving opportunities instead of focusing solely on meeting the filing deadline.
When Should You File Your Taxes?
The best time to file is generally as soon as you have all the necessary documents to prepare an accurate return. Filing before you’re ready can lead to mistakes or the need to amend your return later.
Before submitting your return, make sure you’ve received the relevant documents, which may include:
- Forms W-2 and 1099 reporting wages and other income.
- Bank and investment statements.
- Records of business income and deductible expenses.
- Mortgage interest and charitable contribution documentation, where applicable.
- Information about dependents and qualifying tax credits.
- Records related to rental property, retirement distributions, or other special tax situations.
If you’re missing a form or unsure how to report a particular transaction, take the time to resolve the issue rather than rushing to file.
Get Ahead of Tax Season
Filing your taxes early can help you receive an eligible refund sooner, take precautions against identity theft, plan for any balance due, and avoid the pressure of last-minute preparation. It also gives you more time to review your finances and identify opportunities for better tax planning.
The key is to start early and file accurately, not simply to be the first person to submit a return.
If you need help preparing your return or planning for the year ahead, we can help you understand your tax obligations and make informed financial decisions.