Even though the IRS has started accepting tax returns, most of us aren’t yet ready to file. There are, however, reasons to consider filing your return early. Here are some of the most common:
Get a faster refund: If you file in February or March, the IRS will not likely be as busy as they are in April or later. While new legislation delays receiving refunds for tax returns claiming the Earned Income Credit and the Additional Child Tax Credit until after February 15, the sooner your tax return is in the queue, the sooner you will receive your refund.
Minimize your tax identity fraud risk. Tax identity thieves work early in the tax-filing season because your paycheck’s tax withholdings are still in the hands of the IRS. If they can file a tax return before you do, they may be able to steal these withholdings. Filing early reduces this risk.
Avoid a dependent dispute. One of the most common reasons an e-file is rejected is when you submit a dependent’s social security number that has already been used by someone else. If you think there is a chance an ex-spouse may do this, you should file as early as possible.
Deliver your return to someone who needs it. If you are planning to buy a house or anticipate other transactions with institutions that will require proof of income, you may wish to file early. This is especially true for those who are self-employed. You can then make your filed tax return available to them.
Beat the rush. As the tax filing deadline approaches, the ability to get help becomes more difficult. So put your documentation together and schedule a time to get your tax return filed. It can be a relief to have this annual task in the rearview mirror.