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Benefits of Filing Your Taxes Early

For millions of Americans, there is no getting around the need to file an annual tax return, and if you need to file a tax return, you might as well get it done early. This year, the deadline to file your 2022 taxes is Tuesday, April 18, 2023. With over 75% of taxpayers receiving an average income tax refund of $3,039, we can’t think of a good reason you’d want to put off filing your taxes. Even if you owe money, filing early is to your advantage (we’ll explain in a bit). Here are the reasons why you should file early this tax season.

Early Filers Avoid Processing Delays

Last year millions of taxpayers waited months to get their tax refunds. A lot of that was because of the amount of paperwork that the IRS had to go through manually. The solution is to file early, file electronically, and choose to receive your refund via direct deposit. Be sure to double-check your forms and information, if you don’t do that or you do it wrong, your tax return is going to get delayed. 

Early Filers Eliminate Tax Deadline Stress stressed about taxes

Any time you’ve got a big, unfun task loaming over you, it’s better to get it out of the way as soon as possible. Constantly thinking and worrying about something is often much worse than actually doing it. Income taxes are no different, you’ll have to fill out the forms and file them eventually so it’s best to get it over with.

Early Filers Average Larger Refunds

If the government does owe you money this year, you want to make sure you’re getting every dollar that’s yours and filing early can help you do that. IRS data shows that taxpayers who file by late February get significantly larger refunds than those who file later, around $400 on average. If you know you’re getting a refund, you’re more likely to file sooner, and that could be part of the reason early filers enjoy larger refunds. But another reason is that the sooner you start on your taxes, the more opportunity you have to make sure you’re claiming all the tax deductions and tax credits you’re eligible for, which takes more time and documentation than claiming the standard deduction.

Early Filers Can Protect Their Refunds From Identity Thieves 

You might go and fill out your tax return and then when you go submit it, its rejected! What happened? Someone using your Social Security number already filed a tax return, and you’re now a victim of tax refund fraud. This can take months to clear up with the IRS and for you to finally receive your refund. It happens more often than you think; between 2015 and 2019, the IRS stopped online tax fraudsters from stealing $26protection from identity theft billion through identity theft tax refund fraud. While the IRS was able to thwart most of those robbery attempts, billions still ended up in the hands of these thieves. Filing early may not completely eliminate the threat of identity theft, but it can protect your refund.

Early Filers With A Tax Bill Have Time To Make A Plan

When you’re facing an income tax bill instead of a refund, it’s natural to put off filing as long as possible. But if you go ahead and fill out your tax forms and file them, you’ll know exactly how much you have to pay and you won’t have to pay in full until Tax Day. Plus, the more time you have to come up with the money, the less likely you are to bust your budget or drain your emergency fund. So, get the facts about what you owe, make your plan, and get that tax bill out of the way.

Early Filers Are More Likely To Get Time With A Tax Professional tax professional

You may have found out the hard way that it’s tough to get on a good tax pro’s schedule during crunch time. In fact, if you need a pro and haven’t set an appointment by at least four weeks out from Tax Day, you may have to file an extension. On top of that, some tax pros charge more to complete your taxes as the filing deadline approaches. The best way to avoid all that hassle is to get an appointment with your advisor as soon as possible.

What Do I Need To File My Taxes Early?

Depending on the complexity of your income and tax situation, you may need the following documents, among others, before you can file your return:

  • W-2 forms from wage-earning jobs.
  • 1099 forms from independent contractor or gig work.
  • 1099 forms from retirement, brokerage or dividend income.
  • Mortgage and property tax statements for itemizing deductions.
  • Charitable donation receipts and copies of medical bills for itemizing deductions.
  • Business expense receipts for Schedule C business deductions.
  • K-1 form for partnership income.

To ensure you have all the necessary documents for filing, consider where you have earned money in the past year, and in which accounts you have invested. The answers will help determine which tax forms may be coming your way.

With tax season right around the corner, you could benefit from filing your taxes as early as possible. Plus, as a Credit Union of Denver member you can save money this tax season with special savings on TurboTax products and with H&R Block. Learn more.

Credit Union of Denver is not a tax expert. Please consult your tax advisor about your individual  tax needs.


Sources and enhanced by Credit Union of Denver

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