April is still months away, but if you think it's too soon to start thinking about your taxes, you'd be wrong.
If reminders about tax time make you want to hit the snooze button until spring, hear us out. Putting off your taxes (especially if you wait until the last minute, as about one in seven taxpayers do) can make you a basket case come the deadline.
The IRS encourages early filing for a host of reasons, and it’s not just because it makes April less of a scramble at their headquarters. Below are three reasons you might want to consider getting a head start on your taxes now.
You’ll have time to deal with new rules. Let's be real: Are you up to date on the latest changes in the tax laws? Chances are, the answer to that is no. So by getting a jumpstart on your paperwork, you (or your accountant) will have more time to determine how or whether any changes for the 2016 tax season (such as slight adjustments to rules regarding standard and itemized deductions) could affect your returns.
You’re likely to get your refund faster. The IRS says it expects to issue more than nine out of 10 refunds in less than 21 days from the time the returns are received. Last year, 73% of taxpayers scored money back, to the tune of an average of $2,857. So if you're expecting a refund this year, why not try to get that money sooner than later—and start using the windfall to help accelerate some of your goals?
You could reduce your risk of tax fraud. Tax identity fraud is the largest and fastest-growing type of identity theft, according to the Federal Trade Commission, with scammers typically filing a tax return using someone else’s personal information and then pocketing their refund. The easiest way to protect yourself is to file early so a thief can’t beat you to the punch, according to the National Consumer League, a nonprofit consumer organization.
This publication is not intended as legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.