4 Reasons to File Taxes Early This Tax Season
It’s time to start thinking about gathering tax and financial documents, statements, and receipts because tax time is here!
Each year, the IRS announces the date it will accept returns… And it’s typically the second-to-last or last week in January.
While we know you could be concentrating on other tasks, it’s also time to start thinking about filing your taxes early.
Here are a few reasons to file taxes early this year:
1 – Help better protect your tax identity
What actions can you take to reduce the threat of tax identity theft? In addition to being cautious about sharing personal information and regularly monitoring your credit report, one of the best things to do to combat identity theft is to file early.
Thieves usually only need a name, Social Security number (SSN), and date of birth to file a fraudulent tax return. A high volume of personal data is exposed from breaches each year (recent estimates indicate the IRS identified 649,000 confirmed identity theft returns.) Tax identity thieves take the stolen information, make up a fraudulent W-2, and file a return claiming a refund, depositing it in an account of their choice – all electronically.
If someone does file a return using your Social Security number before you do, the IRS will reject the return since its records already show a return filed in your name.
Beat those crooks to the punch and file first. While it may not erase the threat of identity theft in the future, it can protect your refund because nobody can claim YOUR refund before YOU.
2 – Take the time to better understand tax law changes
With this tax season being only the second year associated with the Tax Cuts and Jobs Act (TCJA), filing early allows you to take the time to fully understand tax changes made by that tax law. Also, recent legislation passed at the end of 2019 retroactively reinstated many popular tax provisions such as the tuition and fees deduction and deduction for mortgage insurance premiums. There are also changes to the kiddie tax and disaster relief provisions.
If you don’t think you’re impacted by the changes, you are mistaken. In fact, every taxpayer will use a new 1040 Form, as 1040EZ and 1040A were eliminated. The healthcare penalty was also eliminated, however there are still reporting requirements. Other tax credits like the Child Tax Credit have also been modified with the new laws. Long story short, it may be difficult for you to look to past years’ returns as a guide for this years’ return.
In addition, the IRS came out with new guidance on the taxation of virtual currency, which many Americans partake of trading activities.
3 – Eliminate tax deadline stress
Procrastination leads to stress. Many people don’t enjoy doing taxes, so they stall any activity related to tax preparation. You have to gather tax documents from multiple sources, then complete IRS tax forms – which requires attention to detail and knowledge of the tax code. For those of us who don’t have the time or will to do this, it becomes a major stressor.
Here’s the good news — you have access to help. Block Advisors now offers clients an Appointment Readiness consultation to review your life situation and ensure all tax documents are accounted for before your tax appointment. You will also get a 365 Tax Plan so you can make informed tax decisions year upon year.
4 – Avoid the rush and get quick access to a tax advisor
If you are a repeat procrastinator, here’s another reason to change your behavior this tax season… Between January and March, a little more than half of Americans file their taxes. Yet in the later part of the filing season, the remaining taxpayers wait until the last minute. If you file early, you will likely have better luck getting the desired appointment time that works with your schedule. Beyond this, you will have the time to sit down with your advisor and talk through your tax situation. Take the time to really plan your tax strategy in the greater scheme of your financial goals, is to get an appointment with your tax advisor early in the season.
Get matched with a tax advisor in your area today!