Income tax season is upon us. Today is the first day you can file, electronically or on paper. Rejoice! Sound the trumpets! Ready your calculators. Nah. Let’s be honest, most early filers are not filing early, unless they know they’re receiving a refund.
“There’s certainly no reason for them to let the IRS keep their money for two months or more, till April 15th,” says John Ams, executive vice president of the National Society of Accountants. "They want to get it now and I would certainly not blame them.”
But though we may be reluctant to think about it, Ams says there are multiple reasons to get an early start. There are people who qualify for tax credits -- and want their money. And then there are the uber-responsible taxpayers -- those who are sensible enough to think well beyond the end of this tax year, and all the way into the misty future years of their retirement. Chuck McCabe, president of the Income Tax School, says this kind of advance planning is yet another good reason to file early.
If you do you can get your refund in time to fund an IRA.
“You can actually deduct the amount you plan to contribute to an IRA from your tax return even though you haven’t opened the IRA yet,” he says.
Tax magic! McCabe notes that even for those of us who owe the IRS and are planning, instead of mature and responsible fiscal action to fully embrace procrastination -- even we should still file early. Filing an extension, notes John Ams, won’t help postpone the real pain.
“It’s the return that’s not due till Oct. 15th,” he say. “You do not get an extension of time to pay. The money is still due April 15th.”
We know you don't want to, but here are 10 reasons to file your taxes early:
- Get it over with already! If you think you’ll owe taxes, you find out sooner how much you’ll owe. Filing early will give you time to budget, or, to save money before the balance is due. And, if you find out you owe a ton, you can always make a payment arrangement with the IRS.
- Get your refund, now. The National Society of Accountants says in recent years early filers have received refunds in 21 days. Taxpayers filing nearer the deadline day waited an average of 31 days. Why wait for your money?
- Help the children. Having your tax return may help in getting financing. Banks and other lenders, especially small business lenders, often require current tax returns to be submitted with loan applications. And if you have children applying for college financial aid, your tax return information may be required for the financial aid form.
- Take your financial responsibility to the next level. Use your tax refund to fund an IRA. The IRA contribution doesn't have to be funded until your tax filing deadline (April 15 for most people).
- Prevent mistakes. Want a a sleep deprived, overworked accountant doing your taxes? Not so much. One extra zero, or a missing deduction could hurt, big time. Get your taxes done early when your tax preparer is feeling energetic and ready to go.
- Buy yourself time. The last minute is no time to discover a wrinkle that complicates your tax situation. Nor is the last minute the time to make a hurried and careless mistake in your return – a mistake that could trigger an audit.
- Prepare for the ultimate battle. Let's say you do get audited. Filing early means you had time to get your paperwork together and think through your decisions. Maybe the IRS has questions about deductions for your home office or chartiable contributions but you are READY. Bring it taxman!
- Beat the criminals to your refund. Identity theft is a pricey problem when it comes to taxes. If a thief files a false return using your stolen identity (before you file a real one) it could take up to a year to get your money back. Beat the bad guys by filing your return first.
- Skip the line. If you're one of the three out of ten taxpayers who still mails in your returns on paper the line at the post office in April is going to be LONG. Skip the hassles and file now.
- Sleep better. You know you will.