6 Reasons You Should File Your Taxes as Soon as Possible
Tax Day 2023 will be April 18 once again — it’s the second year in a row that the standard April 15 deadline has been bumped back because of Emancipation Day in Washington, D.C.
But just because the IRS gives you three extra days to file your returns doesn’t mean you should take the agency up on its offer.
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Tax season officially started on Jan. 23, which means you can file your taxes right now if you have all of the documents and information you need — and there are plenty of incentives to get an early jump.
There are a few exceptions. For example, the IRS cautions anyone who has income from third-party payment platforms like PayPal and Venmo to wait for 1099-Ks, which will come later in the season.
But, unless you have a good reason to wait, consider these good reasons to get started now.
Owed a Refund? File Early, Get Paid Early
According to the IRS, taxpayers who file their returns by late February get much bigger refunds than those who file later in the season. It’s not because the government rewards people for filing early. It’s because people who anticipate big refunds are understandably eager to get their hands on the cash they’re owed — and those who file first get paid first.
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The IRS issues most refunds within 21 days, so you won’t have to wait more than three weeks in most cases — but the longer you wait to file, the longer you’ll wait for the money you’re owed to land in your bank account.
Just keep in mind that if you claim the Earned Income Tax Credit (EITC), the IRS is required by law to wait until mid-February to process your refund.
Avoid the Chaos of the Peak-Season Rush
Thanks to decades of anemic funding and the ongoing effects of the pandemic, the IRS started 2022 with a suffocating backlog of 4.7 million original individual paper returns, 3.6 million amended returns and 3.2 million original business returns.
The agency entered 2023 in better shape, but it’s still processing millions of old returns. By filing early, you’ll avoid the logjam of peak tax season, when tens of millions of taxpayers simultaneously flood the IRS with an avalanche of new returns, causing delays, errors and miscommunications.
Early Birds Rarely Need Filing Extensions
If you discover that you’re missing documents or that you need more help with your taxes than you originally thought, getting an early jump will give you plenty of time to adjust and maneuver. If you procrastinate, on the other hand, even minor roadblocks could run out the clock and force you to request an extension from the IRS. They’re not hard to get, but extended filing deadlines drag out tax season through the summer and even as late as mid-October — just a few months before it’s time to start all over again.
Even if you avoid pleading for more time, late filers endure the stress of watching the clock tick down toward zero — and anyone who has experienced tax deadline anxiety knows that alone is worth the early effort.
Tax Preparers Still Have Openings — and Discounts
Clients start reaching out to CPAs, tax attorneys and other industry professionals in December, but those who file in January and February still catch them before they’re swamped with the peak-season rush of March and April.
By that time, tax season has hit its crescendo and most of the good tax pros are booked solid — and they will have certainly discontinued any winter discounts they were offering by the time spring rolls around. But for the next month, many tax preparers will still be lowering prices and offering other incentives to fill open slots in the slower early season before their schedules fill up.
Beat Identity Thieves to the Punch
Spring isn’t just peak time for tax professionals; it’s also the busy season for fraudsters and identity thieves. Few things put more personal information in one place than tax documents, and scammers want your data, your refund and whatever else they can get their hands on.
Many people don’t realize their data has been compromised until they try to file but can’t because of a duplicate Social Security number. By filing early, you’ll learn about anything untoward when there’s still time to mitigate the damage — or hopefully get your returns filed before scammers get the drop on you.
If You Owe the IRS, You’ll Have Time To Plan and Save
Millions of people look forward to refunds because they overpaid throughout the year, but plenty of others misjudge their tax obligation in the other direction and wind up owing the IRS. If you have a surprise tax bill, it’s always better to get it early so you can extend the time you have to save money, come up with a payment strategy and negotiate with the IRS if necessary.
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