It’s tax time again! It may not be the most wonderful time of the year, but it is a necessary evil. If you tend to put off filing taxes until the last minute, you might want to consider filing taxes early this year.
Here are a few of the benefits of sending in your taxes early:
Why You Should Consider Filing Taxes Early in 2021
We actually had to wait 16 more days to begin filing taxes this year than in 2020. The IRS bumped the date to receive returns to Feb. 12 so they could have time to prepare following the December tax law changes. But now that they are officially accepting returns, you might want to get a jump start on sending them in.
This year, it’s particularly important to start filing taxes early if you’re owed any stimulus money from the first or second checks that went out. For example, if you had a baby in 2020, you did not receive additional money for that dependent yet. But using the Recovery Rebate Credit, you can get the money you’re owed. The same goes for if you didn’t receive a stimulus check at all, or believe you did not receive the full amount.
The sooner you file, the quicker you can secure those funds.
Additional Benefits of Filing Taxes Early: Receiving a Quicker Refund
One major benefit is pretty obvious: The earlier you file, the earlier you get your refund money.
But what if you’re not getting a refund?
Filing early is still beneficial because it gives you more time to pay your tax bill before the April 15 deadline. If you file early and are surprised by a bigger tax bill than you were expecting, you’ll have more time to get that money together.
Additionally, if you underpay on your estimated taxes as a business owner, you’ll get hit with an underpayment penalty that increases over time. If you file earlier, you’ll have more time to make sure you don’t have penalties tacked onto what you owe.
Another huge pro to filing early? Fraud prevention.
Every year, fraud is a major problem at tax time. Criminals assume taxpayers’ identities and steal their refund money. Filing taxes early means you can give fraudsters less time to accept your refund on your behalf. (No, unfortunately, they’re not interested in paying your tax bill.)
More Time to Gather Information
If you’ve had major changes in the past year – like buying a house or starting a business – filing taxes early gives you more time to gather necessary documents. It can take time to track down all the paperwork you need, so starting early means you have the time to collect what you need without stressing about a looming deadline.
Tax Resources to Help You Get Organized
Need some motivation to get started on your taxes? Here are some posts from past years to help you get organized:
Last Minute Opportunities to Save on Taxes
Physician Tax Tips: Four Strategies to Know
Tax Season: Prep Help for Filing
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes everyone should have access to financial resources and coaching. For more information on the services offered, contact Katie today.