Many people put off paying taxes until the last possible day that they can file to put off dealing with numbers or facing a high tax bill. However, even if you owe the IRS money, there are benefits that come with filing your taxes early. Here are three reasons you should consider doing your taxes as soon as possible this year.
#1 Thwart Identity Fraud
Every year, millions of dollars of tax returns are claimed through false returns filed by individuals who have stolen someone's identity. All one needs to steal your identity and file false tax returns is access to your social security number, which can be found on your past tax returns and possibly even your pay stubs.
Generally, when people try to scam the IRS with fake tax returns, they get away with it because they file the returns as early as possible, before the person whose identify they have stolen is able to file their taxes. The best way to get a jump on and prevent identity theft is by filing your taxes early and protecting your social security number.
#2 Prevent The Need To File An Extension
A consequence of waiting to file your taxes is that you find, as you are doing your taxes, that you don't have all the necessary documents or time to complete your taxes. When this happens, you can file an extension so you have more time to complete your tax paperwork. The one thing that filing an extension does not give you though is more time to pay your taxes. You will still need to know if you owe taxes and pay them by the tax filing deadline, which means you will still need to complete or estimate your tax burden by the deadline. If you don't pay your taxes by the deadline, you will face penalties and interest fees.
By working on your taxes and filing them early in the year, you will be able to avoid having to file for an extension. You will avoid having to estimate how much taxes you owe and will eliminate the possibility of having to pay interest and penalties because you didn't pay your taxes or underpaid your taxes.
#3 Provide Time To Pay
If you owe taxes, there is actually an advantage that comes with paying your taxes in advance. By doing your taxes early, you will be able to figure out exactly how much you owe the IRS. Then, you will have a few months to either make payments on your taxes without having to file for a tax payment plan or you will have a few months to save up to pay your taxes. You don't have to pay your taxes on the day that you file, you just have to pay them by the tax filing deadline.
Contact a tax preparation service, such as Hough & Co CPA , for more information.