The official tax filing season kick-started on January 29, 2018. The last date to file income tax returns is April 17, 2018. Usually, the last date to submit income tax returns is April 15. But since it falls on Sunday and Emancipation Day is on Monday (April 16, 2018), so the IRS has extended the deadline to April 17, 2018. So you’ll get more days to file your tax returns.
You can submit your income tax returns as early as possible or you can aim for that deadline. But if you ask me, I would suggest you income tax returns early. Here’s why.
1. A chance to get a tax refund early:
Almost 80% of the people filing income tax returns get a refund every year. Last year, the average refund amount was $2763. It wasn’t exactly a small amount. Taxpayers could use the money for paying their bills, funding a vacation, and buying what they need.
If you file income tax returns early, you can expect to get a refund within 3 weeks. However, if you’re planning to claim the Earned Income Tax Credit (EITC), you need to wait a little longer since the IRS will withhold your associated refunds even though they are not related to your credits. The IRS is expected to withhold your entire refund due to the high level of tax frauds. You have to wait until late February.
The quickest way to get a tax refund is to file your income tax returns electronically and opt for the direct deposit. But this is possible only when you’re not claiming the Earned Income Tax Credit.
2. A chance to protect yourself from tax fraud:
Believe it or not, tax fraud is a big problem in our country, and you can avoid it by filing income tax returns early. A fraudster can access your personal information, file an income tax return in your name and claim the refund. However, if you file income tax returns early, then the criminal may not get a chance to cheat you.
The IRS has software that can detect duplicate returns. If it has one file in your name and someone else submits another file, it’s regarded as the fraudulent return. Needless to say, it will be regarded instantly. If a fraudster files income tax return early, it could postpone your refund and create a big problem.
3. Less stress and more free time:
The tax filing process is stressful when your return is complex and needs lots of paperwork. You need to calculate tax deductions, crunch numbers, find out the documents, and so on.
One of the biggest benefits of filing your income tax returns early is that you can live stress-free in April. Once you have filed your income tax returns, you can focus your mind and efforts elsewhere.
4. Get more time to pay if you owe more:
Usually most taxpayers get a tax refund every year. But there is a section of taxpayers who end of owing more money to the IRS. If you fall into that section, then you can be in financial trouble especially if there is no money in your checking account.
If you file your income tax returns early, you’ll get minimum 2 months and 15 days to come up with a plan for clearing your tax debt. There are several tax debt relief programs you can take advantage of instead of paying penalties to the IRS.
Let me explain it more clearly with an example:
Studies reveal that 39% Americans don’t have funds in their checking accounts. Suppose you’re one of them and discover that you owe $200 to IRS in early April for underpaying your taxes in 2017.
Imagine your situation at that time. You’ll have limited resources at your disposal for paying the IRS. If you file your return in January and discover that you owe money to Uncle Sam, you can get a side hustle to generate that cash.
Although there are several good reasons to file income tax returns early, here’s one reason not to. Too much haste is not always good. If you don’t have the data or correct information, you may fail to submit accurate income tax returns. Though it’s helpful to submit your income tax returns early, if you don’t have the information, it’s better you wait. Otherwise, you may get audited and face problems later.