Everyone knows that taxes are due on April 15th each year (although returns are technically due by April 18th this year due to the 15th landing on a Saturday and other holidays), but not everyone knows that you don’t have to wait until the last minute. In fact, you can start filing your returns as early as late January and have them processed by the IRS as they are filed. But, are there really incentives to not procrastinating? Yes. There are five to be exact and here they are.
1) You are doing yourself and your tax preparer a huge favor
Collecting documentation and receipts and numbers for your return can be time consuming, but it is easily one of the most critically important aspects of preparing your return. If you start early and finish early, you can assure yourself (and your tax preparer) that you have not rushed the job and have truly found everything that is needed. Also, your tax preparer will greatly appreciate that you are not one of the multitudes of clients who do in fact wait until the last minute as it will give them time to not be rushed when preparing your returns.
2) Get refunds faster
It’s fairly straightforward: the sooner you file, the sooner you can get your refund. The IRS will start issuing refunds on February 15, including refunds for those who have claimed the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). Once a return has been filed, refunds should be issued within 21 days. The IRS has implemented new security safeguards to protect against identify theft and fraud which has accounted for the February 15 date.
3) Outscam the Scammers
IRS refunds have become a source of identity theft and fraud over the years. One of the reasons the thieves have been successful is that they file before the actual taxpayer files and thus, claim the refund. One individual managed to pull this off for eight years until being caught last year. So, if you file first, the identity thieves will find the door shut on their scam. The IRS is well aware of the issue and is beginning to implement safeguards to verify identities of filers to circumvent thieves.
4) You give yourself extra time to pay your balance
Should you owe money to the government for 2016, filing your returns early can buy you some time to gather the funds to make the payment due on April 18th. This is particularly helpful for individuals who are caught short and need time to raise the funds to make the necessary payment.
5) Have access to potentially more money for college
Students who file the Free Application for Federal Student Aid (FAFSA) or are interested in applying for private scholarship funds can get a boost by filing their tax returns early. This is because the data for the FAFSA and the private scholarship applications will come from the tax return, so the earlier you have the information, the earlier you can apply for aid. The pool of aid to apply for might be larger too since not everyone will have gotten around to filing, particularly since the FAFSA is not due until June 30, 2017. The early bird gets the worm.
If you have questions about your tax liabilities or need assistance in determining your exposure, please, consider giving Morgan Maxwell a call to assist you today.
Written by E. Morgan Maxwell
Since beginning his own firm, Mr. Maxwell has continued a tax-law oriented practice encompassing a wide range of transactions, planning and dispute resolution. His dispute resolution experience includes involvement at all levels of the Internal Revenue Service (Examinations, Appeals, Collections, Office of Professional Responsibility, the U.S. Tax Court), the Pennsylvania Department of Revenue, the Tax Litigation Section of the Pennsylvania Attorney General’s Office, Pennsylvania Commonwealth Court, Common Pleas Court and local taxing jurisdictions in southeastern Pennsylvania.
