5 Good Reasons to File Your Tax Return Earlier Rather than Later

by Jessica Sommerfield · 14 comments

Most of us fall into two camps when it comes to filing our taxes: those who are super organized and file their tax return as soon as possible, and those who barely manage to scrape their paperwork together by April 15th.

Then again, not everyone who waits for the deadline is disorganized. Some people wait until the last minute because some companies tend to make mistakes and send in corrected forms late in the tax season. Which camp do you fall into? What are the advantages of either tendency (or strategy)?

I’d like to propose that there are more advantages to filing early (yes, even if you owe the IRS money) than filing at the last minute. Here they are:

#1: If you’re due a refund, you’ll get it sooner.

This is one of the greatest perks. Why let the government borrow your money for a few more months when you could be using it to pay off debt, make investments, fund your IRA, or reach one of your short-term savings goals? Better yet, consider adjusting your exemptions this year so you have more of that money to use all year long (think compound interest).

The rate of return for early filers is also faster since the IRS isn’t as busy. This year, the IRS expects to make direct deposit refunds within 21 days, but if you wait until later in the season, you could also wait several more weeks for your refund.

#2: You’ll have more time to arrange payment before the deadline if you owe taxes.

There’s still an advantage to filing early if you expect to owe taxes. If you file in January, you’ll have until the deadline to pay in full. This allows you to plan for the expense over a few months so it doesn’t hurt your budget (or your credit card bill) as badly.

#3: If you’re purchasing a house or filing a FAFSA, you’ll need your tax information as soon as possible.

Lenders request at least a few years of your tax returns as proof of income and ability to repay a mortgage. Getting your taxes done early will get you ahead in the pre-approval and purchasing process. And, although you can use the previous year’s tax information to file the FAFSA, doing this year’s taxes before you file will save the hassle of updating the form online later on.

#4: You might not need an extension (or a tax professional’s help).

Tackle them sooner if your taxes are a headache. You’ll catch mistakes and missing paperwork early enough to buy some time without having to file for an extension. The biggest risk with an extension is that you owe taxes in full on April 15, before you even know exactly how much you owe. If you can’t pay, the IRS can charge penalties and interest until you do.

Waiting until the last minute can also mean you’ll need the help of a CPA, which will cost even more.

#5: You’ll beat the tax identity thieves.

Don’t underestimate the sneakiness of people who don’t want to pay their back taxes. Waiting until the last minute to file also gives tax return identity thieves more time to steal your information and claim your refund. Although the IRS has safeguards against this kind of identity theft, it still happens – especially early in the season. The earlier you file, the more you can rest easy knowing you’re the first (and last) person to file with your identity. Of course, it’s always a good idea to protect your Social Security number and opt for direct deposit versus refund checks too.

I try to file my taxes as early as possible every year. How about you?

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{ read the comments below or add one }

  • Keith says:

    The FAFSA is no longer a reason to file taxes early. As the official Federal Student Aid website reports, “Students now report earlier income information. Beginning with the 2017–18 FAFSA, students are required to report income information from an earlier tax year. For example, on the 2017–18 FAFSA, students (and parents, as appropriate) must report their 2015 income information, rather than their 2016 income information.” (https://studentaid.ed.gov/sa/about/announcements/fafsa-changes) It’s still a good idea to file taxes early; this just isn’t a reason any more.

    • Angie says:

      I came here with the same comment. Cheers!

      The first year of this change has been bumpy, but future years will be so much easier.

  • James says:

    From my experience, #3 is only partially true. I recently purchased a new home and have in the past refinanced my previous home several times. Not once did a lender ask for tax returns. Maybe if your credit score is horrible they will ask for it, but in general it’s not a factor.

    • David @ MoneyNing.com says:

      It’s interesting that no one has ever asked you for tax returns James. I’ve been asked for my tax returns every single time I got a mortgage or refinanced. I remember being annoyed because I only had paper copies a few years back, which meant that I needed to scan every page in so I can email them the document!

  • Centsai says:

    It’s definitely better to be earlier than later for most things, especially when it comes to taxes! It is always a great feeling to get your tax refund early or be able to not stress out about having to pay your taxes in such a rush!

    • David @ MoneyNing.com says:

      I wish more people were more like you 🙂 If we all filed early, then April 15th wouldn’t be such a popular date!

  • Jeff | VTX Capital says:

    Yeah, there’s no point in putting off the inevitable. It’s such a relief once you’ve gotten that out of the way for the year. These are some great points and it’s unfortunate that we actually have to worry about tax identity theft these days.

    • David @ MoneyNing.com says:

      It IS such a relief. I’m waiting for a few more forms to be mailed to me and I can’t wait to submit that tax return and be done with it!

  • Amanda says:

    I always submit my tax return as soon as I receive all of the documents I need. I love receiving my refund early. Plus, the earlier you get it in the faster it gets processed.

    • David @ MoneyNing.com says:

      Yeah there’s no point letting the IRS hold onto our money even longer!! Good move filing early Amanda!

  • FullTimeFinance says:

    We file immediately for the reasons listed plus simply understanding budget clarity. It’s good to know where you will land in April the same as any other month.

  • Jonathan Dyer says:

    Wow — I had not considered that last one. Although I suppose these days I should have. :-/ Even without that unfortunate reality, I’ve always enjoyed getting my taxes out of the way earlier and alleviating that stress.

    • David @ MoneyNing.com says:

      You are doing it right by ruling early. Once you are done, then you can spend your mental energy on other productive work that will have you pay even more taxes because you will make more 🙂

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