Filing your taxes can be a bit of a headache. While many people may have good intentions of filing as soon as they get their W-2s, the reality is people often procrastinate. Then, before you know it, the deadline sneaks up and forces you to reorganize your schedule to make time to file your taxes. This can cause a great deal of unnecessary stress.
If that scenario sounds familiar to you, it’s time to consider filing your taxes early. Doing so will not only relieve your stress and anxiety levels, but there are many other benefits you’ll experience.
The Benefits of Filing Early
Eliminate the stress of the deadline.
As mentioned above, the pressure to file your taxes before the deadline can be daunting — especially if you wait until the last minute. Do yourself a favor and file as early as possible so you can set your mind at ease. Waiting until the deadline may require you to file an extension, which will likely cause even more stress and anxiety.
Get your refund sooner.
While this may be an obvious reason to file your taxes early, it is still a good one, nonetheless. Filing early means you’ll get your tax refund quicker — especially if you file electronically and request direct deposit of your return. Then you can use your refund to pay off existing debt, for travel, or to boost your savings.
Have more time to pay.
Just because you file early doesn’t mean you have to pay your tax liability early. If you owe money this tax season, filing early will give you more time to pay the owed balance, which will still be due on the tax filing date. This is especially important if you don’t have much money saved or the tax burden catches you off guard. By filing early, you’ll have extra time to devote to saving as much as possible to pay off your tax bill and avoid dipping into your emergency fund.
Enjoy quicker processing.
If you’re using a tax preparer, their schedules are typically more flexible at the start of the tax season. Most people tend to wait until the last minute to file, which means your tax preparer may be fully booked, forcing you to file an extension on your taxes.
Realize fewer errors.
By filing earlier, you can spend more time getting all your tax documents organized to ensure you get the maximum refund. If you wait until the last second to file, you may rush through the process, miss out on deductions or credits, or possibly make errors leading to an audit.
Prevent identity theft.
Identity theft and tax fraud continue to plague citizens every year. Fraudsters regularly attempt to file taxes in other peoples’ names in order to claim their tax refunds. By filing early, it’s less likely that someone will be successful at filing a return using your identity. It also means you won’t have to go through the tedious and often stressful process of proving your identity with the IRS. That can sometimes take months to straighten out.
Jump start other financial activities.
These days, many big financial decisions, such as buying a new home, require your tax documents to complete the application process. If you’re preparing to make a significant financial change that requires your tax forms, receiving those documents as soon as possible will make the process quicker and easier for you. Likewise, getting your refund sooner will provide you with extra funds that may be necessary for a down payment or closing costs on a new home or other expenditure.
Finally, it’s important to note that employers are required to send W-2s out by January 31st. Although most businesses will send tax documents before this date, it’s best to wait until early February to ensure you receive all the necessary documents before you file. However, once you’re confident you have all the necessary documents, file as soon as you can to reap the most benefits.
We’re Here to Help!
While filing your taxes may not be on your list of fun things to do, the benefits of filing early can really add up. Be sure to set up direct deposit for your taxes into your credit union account in order to receive your refund quicker. Then, once you receive your return, it’s always a good idea to earmark a certain amount for your emergency fund and to pay down existing debts.
We offer exclusive discounts to Money FCU members for using TurboTax or H&R Block. Find more information in our Love My Credit Union Rewards center.
If you would like to open a savings account for your emergency fund, we’re here to help. Call, chat, or text us M-F, 9am-4pm – (315) 671-4000.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.