This topic will be discussed with the following structure.
- 1. Quicker tax refunds
- 2. Protection from tax return identity theft
- 3. Avoiding Tax Extension
- 4. Reduce cost of filing
- 5. Obtaining financial information
The benefits of filing your tax return early are as follows:
1. Quicker tax refundsOne of the most popular reasons people file their tax return early is to receive a faster tax refund. The fastest way to get your refund is to file your return through electronic means with direct deposit into your bank.
2. Protection from tax return identity theftAnother benefit of filing your tax early is to protect you from tax return identity theft. If a criminal gets access to your social security number, the person has everything needed to file a tax on your behalf, which could lead to you losing all your tax refunds.
Prevent this kind of theft by keeping your SSN secret and file your tax at the beginning of the season.
3. Avoiding Tax ExtensionWhen you file your tax early, you eliminate the need to file an extension. A tax extension is usually necessary as a result of disorganization. Some people that do not file their tax early will need to look for additional deduction or gather receipts, which could lead to an incomplete filing.
If there is last minute information that you need to file, waiting till the last minute makes the entire process more stressful, and you might end up getting an extension.
It also helps to keep well-organized records of all your relevant tax documents so that the process is as seamless as possible. Doing quarterly tax reviews also help.
4. Reduce cost of filingWhen you delay in filing your tax, you increase the chances of employing the service of tax professional to help you get things done.
If you file for an extension but did not settle your debt, and you have a balance due, you will be required to pay interest and penalties on the outstanding tax debt until you clear your debt. Avoid this situation by preparing your file as early as possible.
5. Obtaining financial informationOne of the benefits of filing your tax as early as possible is that it gives you access to your financial information. If you want to buy a house or return to college, preparing your tax return as early as possible will help you obtain the essential information you need.
The data from form 1040 are essential, college students can use such information to apply for financial aid. Also, anybody that intends to buy a house must present a completed tax return as evidence of their household income.
File your tax early or call a tax specialist in your locality to assist you if you are having trouble with your taxes.