What do we want? A tax refund! When do we want it? Now!
Here are eight reasons you should pick up the pace on your tax preparation and file well before this year's April 18 deadline.
1. You'll Get Your Refund Faster
Simple logic, folks: The sooner you file your returns, the faster you'll receive a refund (if you're owed one). The IRS says it issues nine out of 10 refunds within 21 days (sometimes less) with e-file and direct deposit. Use that money to get a head start on spring and summer home improvements, pay off debt sooner than later, or bulk up your emergency savings account.
2. Filing Online Is Easy
If your taxes aren't complicated — and they shouldn't be if you don't have multiple sources of income — filing online should be a walk in the park. Using TurboTax online, for example, is almost effortless, and it will help you submit an accurate return while also saving you money. Best of all, you can do it on your own time and in the comfort of your own home.
3. You'll Have Extra Time to Pay the Taxes You May Owe
Filing early doesn't mean you have to pay the taxes you may owe immediately. In fact, it'll give you a decent window to figure out how to cover that cost, especially if you don't readily have it available. If you submit your tax return in February, for example, you still have until the April deadline to come up with payment.
4. Your Accountant Can Spend More Quality Time on Your Return
I'm an entrepreneur, and I own a business that requires a decent amount of accounting at tax time. Admittedly, this is not something I want to handle on my own, which is why I have a CPA. I usually schedule my annual meeting with him mid- to late-February — before he's bombarded with his other clients' returns — so he can give mine the TLC it needs. If you have a lot of components to your own taxes, this is definitely a strategy to consider. You don't want to lose out on refund money because your accountant was in a hurry.
5. You Can Spend More Quality Time on Your Return
Even if you're handling your taxes on your own, it's still wise to give yourself ample time to prepare. A lot of information goes onto a return, and you need to ensure that everything is correct. Tax mistakes can be costly, but they can also be avoided if you plan ahead instead of trying to beat the clock at the last minute. Triple-check your numbers and personal information for accuracy. (See also: 5 Common Tax Mistakes We Need to Stop Making)
6. You'll Reduce the Chance of Identity Theft
Identity theft is a major concern with regards to your finances, and even your tax return is at risk. Scammers can file fraudulent returns in unsuspecting taxpayers' names, but the chances of that happening are reduced the earlier you file. (See also: Beware These 6 Phony IRS Calls and Emails)
7. It'll Make Your Home-Buying Process Easier
I've bought several homes over the years, and it's very stressful. For one, the mortgage company needs every last piece of your financial information that they can get their hands on — and then some. Your homebuying process will go much smoother this time of year if you've already filed your taxes.
8. You'll Have Time to Help Advise Your Working Dependent Kids
Your working children can also make mistakes on their own returns, filing as independents when they're clearly still dependents. Have a discussion with your kids about this designation — especially important to remember if they're away at college and filing on their own — so you don't miss out on deductions that you deserve.