Tax season can feel overwhelming. But putting off filing your return until the last minute won’t make it any less daunting. Truth be told, filing your taxes early has several advantages that can make the process easier and more beneficial in the long run.
Instead of waiting until the last minute, consider filing as soon as possible to take advantage of these six key benefits.*
1. Faster Refunds
One of the biggest benefits of filing early is getting your refund sooner. The IRS processes early returns more quickly since fewer people file in the first few weeks of tax season. If you're expecting a refund, filing promptly means you’ll have access to your money sooner, helping you pay off debt, invest, or save for your future.
2. Better Financial Planning
Filing early gives you a clear picture of your tax situation so that you can plan accordingly. Whether you owe money to the IRS or expect a refund, knowing your tax liability sooner helps you make informed financial decisions. This insight can be crucial for managing cash flow, planning investments, or adjusting your savings strategy.
3. Avoiding Processing Delays
As the tax deadline approaches, the IRS becomes inundated with returns that inevitably lead to processing delays. By filing early, you reduce the chance of running into these speed bumps and ensure your return is processed efficiently. So you can get your much-anticipated return sooner.
4. Lower Risk of Identity Theft
Tax season is stressful enough without having to worry about added pressures. Unfortunately, tax identity theft is a growing concern, with fraudsters filing false returns using stolen Social Security numbers. Filing your taxes early minimizes this risk by getting your actual return to the IRS before criminals have a chance to do so. The sooner you file, the less opportunity the bad guys have to submit a fraudulent return in your name—and to steal your tax return.
5. Avoiding Last-Minute Stress
Procrastination can lead to unnecessary stress. And stress makes it easier to make mistakes. Filing early eliminates the anxiety of scrambling to meet the deadline and allows you ample time to review your return for accuracy. Filing early also ensures you have time to gather ALL the necessary documents so you don’t find yourself in a difficult situation as you approach the filing deadline.
6. Easier Access to Tax Professionals
Tax preparers get busier as the deadline nears, which makes it harder to schedule an appointment. Filing early means you’ll have more access to expert guidance, ensuring you get personalized advice and avoid costly errors. Whether you're working with an experienced tax preparation agency or tackling the filing process alone, you will enjoy a smoother experience if you get started sooner rather than later.
* File Early, But Not Too Early
Don’t get overly zealous when filing your tax return early. You must have all pertinent tax information to file an accurate return. The law demands that employers issue income statements, such as W-2s, by January 31. But you may be responsible for maintaining records or locating other documentation on your own.
Use this checklist to ensure you have everything you need before you get started.
- Income Documentation
- W-2: Wages and taxes withheld from an employer
- 1099-INT: Issued by banks and financial institutions to report interest income earned on accounts like savings or money market accounts.
- 1099-DIV: Sent by financial institutions to report dividends and capital gain distributions from investments in stocks or mutual funds.
- 1099-R: Used to report distributions over $10 from pensions, annuities, retirement or profit-sharing plans, IRAs, or insurance contracts.
- 1099-MISC: Reports miscellaneous income such as rent, prizes, awards, and other earnings not covered by other 1099 forms.
- 1099-K: Provided by payment settlement entities to report payment card and third-party network transactions, especially for those engaging in online sales or freelance work.
- 1099-G: Reports unemployment benefits paid.
- SSA-1099 or SSA-10425: Provided by the Social Security Administration to report social security benefits received.
- Self-Employment Records: Including income statements, expense receipts, and mileage logs for contract or gig work.
- Deduction and Credit Records
- 1098: Shows interest paid on your mortgage.
- 1098-T: Reports tuition payments and receipts for qualified educational expenses
- Property Tax Records: Documentation of real estate and personal property taxes paid.
- Charitable Contributions: Receipts or acknowledgment letters from charitable organizations.
- Medical Expenses: Receipts and statements for medical and dental expenses.
- Childcare Costs: Statements of payments made to childcare providers, including their tax identification numbers.
- Most tax filers benefit from using the Standard Deduction as opposed to itemizing these deductions. However, it is wise to calculate your tax liability with deductions before assuming the Standard Deduction is best for you.
- Other Relevant Documents
- Last Year’s Tax Returns: Useful for reference.
- Estimated Tax Payments: Records of any quarterly tax payments made during the year.
Key Takeaways
Filing your taxes early isn’t just about getting it out of the way—it’s about taking advantage of key benefits that can save you time, money, and stress. From receiving faster refunds to having more access to tax professionals, getting a head start on your taxes is a smart financial move. Don't wait until the deadline. File early and enjoy the peace of mind that comes with being prepared. Just be certain you’ve received and obtained access to all of the documentation you need to file accurately.
If filing your taxes seems too overwhelming to tackle on your own, don’t despair. AMG Finance is here to help you make sense of the tax filing process. Schedule an appointment with a friendly tax professional at AMG Finance to ensure your tax return is completed accurately. And don’t delay. Your best chance of getting your tax return filed early is to contact us now.
