It’s almost March 15th, which means one more month until your taxes are due. Have you filed your returns? Or do you typically wait until the last minute? If you’re among the estimated 20 percent of procrastinating taxpayers who file in the last two weeks leading up to the April deadline, here are four reasons to file early:
Tax Fraud
Most tax fraud peaks during tax season. Identity thieves use this time in particular to prey on taxpayers who wait longer to file their returns. Identity theft, one of the IRS’s Dirty Dozen tax scams, is an ongoing concern. Even though the IRS reported a 50 percent decrease in the number of taxpayers affected by tax identity theft in 2016, considering this type of fraud skyrocketed in 2014 and 2015, it’s no less a threat than before. And if you’re affected, it could take months to sort out the mess with the IRS.
Curious about the other 11 scams making up the IRS’s Dirty Dozen? Click HERE for more information
Faster Refund
In 2016, about 70 percent of taxpayers are expected to receive a refund. If that’s you and if you file early, then you get your money faster. Plus, if you wait until April, online tax filing software prices tend to rise, and many tax professionals will either charge a premium to expedite your return, or will recommend that you file an extension. The IRS’s policy is to issue all refunds within 21 days, but paper checks can take several weeks to arrive. Direct deposit and filing online are still the fastest ways to get your refund.
More Time to Pay
If you owe money to the IRS, it’s better to know and be prepared than find out at the last minute and scramble to pay your taxes. By filing early, you will have more time to pay. Since all taxes owed are due by April 15th – or in this year’s case, April 18th, the IRS offers monthly installment plans and applications to reduce the amount owed. But even if you pay your taxes in a monthly installment, there is a fee to do so, on top of the IRS’s penalties for late payment.
FAFSA
Are you or a dependent attending college in the fall? If so, the Free Application for Federal Student Aid (FAFSA) uses information from your 1040 to determine eligibility for grants, scholarships, and financial aid. The federal FAFSA deadline isn’t until June 30, but states have varying deadlines of their own – in Maryland, for example, the state deadline is March 1. Not to mention that many grants and scholarships are fulfilled on a first-come, first-serve basis. If you wait to file your taxes and the FAFSA, you could be missing out on free money.\
Plus, with easy access to online tax preparation software – or the expert guidance from a member of our tax team at Naden/Lean – there are fewer barriers to timely tax preparation. If you haven’t already filed, make it a priority. And if you have questions about your taxes, contact us anytime.