Taxes may not be due until April, but there are several benefits to getting started now.
You don’t have to delay just because tax season doesn’t officially start until Monday. Some tax preparers will help you fill out your tax return now, before the IRS actually starts accepting them. They’ll keep your information on hand, and once tax season formally begins, the companies will immediately submit your return to the government for processing.
Late last year, many tax experts were actually recommending that some people hold off on filing early due to a major IRS rule change that would have required payment networks popular among gig workers and folks with side hustles to send additional paperwork needed to file a return. However, the IRS announced just before Christmas that it’s pushing back the implementation of that new 1099 rule until next year to give taxpayers and professionals more time to prepare.
That means your last good excuse to procrastinate on your taxes is null. Here’s why you should get started early this year (and most every year, for that matter):
1. To get your refund faster
No one thinks filing taxes is fun. So here’s a little motivation to get a head start: You can get your tax refund sooner if you file early.
Exactly how much sooner is difficult to predict, however, and it can be risky to bank on a specific timeline: “The IRS cautions taxpayers not to rely on receiving a 2022 federal tax refund by a certain date especially when making major purchases or paying bills,” the IRS warned in November. “Some returns may require additional review and may take longer.”
For instance, the agency says it’s legally prohibited from issuing refunds before mid-February to people who claim the Earned Income Tax Credit or the Additional Child Tax Credit.
Still, generally speaking, the sooner the IRS receives your return, the sooner the agency can begin processing it — and issuing your refund. For example, by Feb. 4 last year, the IRS had received 16.6 million returns and already begun delivering more than 4.3 million refunds, agency data shows.
To ensure your refund timeline is as fast as possible, submit your taxes electronically (as paper returns take much longer to review) and sign up for direct deposit.
2. To know what (or if) you owe the IRS sooner
Even if you don’t expect a tax refund, there are still perks to filing your return well before the April deadline.
If you tend to owe the IRS, filing early allows you to calculate your tax balance — and make a plan for how to cover it — sooner. The good news is that you won’t need to pay upon submitting your return.
Instead, you can file now and pay later in April if you need to. This strategy can be especially helpful if you need some time to budget for your tax payment.
3. To avoid tax fraud
Identity thieves may use stolen information to file your taxes, and they’re not doing it as a favor. They want your refund.
In the massive Equifax data breach of 2017 alone, approximately 145 million Social Security numbers were compromised — the equivalent of more than half of all U.S. adults. And once your Social Security number is obtained by hackers, it can be resold forever.
Fraudsters can use your Social Security number to file a bogus return, and if they do, you won’t be able to file your own taxes because the IRS flags multiple submissions under the same Social Security number.
The opposite is also true. By completing your taxes early, you can bar hackers from filing a fraudulent return in your name.
4. To skirt the stress of peak tax season
The first two weeks of April can be a hectic time for those who wait to file their taxes late in the season. Think: the mad dash for misplaced documents, the slowdown (or outright crashing) of tax websites and the frantic phone calls for tax help.
If you get started sooner, you can round up your tax paperwork without the pressure of the impending deadline. And if you do need help from a tax professional, you will have much better luck finding an appointment if you dodge the crowds of last-minute filers.
To encourage folks to file early — and ostensibly lessen the throngs of customers at its storefronts on Tax Day — tax prep company Jackson Hewitt announced a sweepstakes that would double the tax refunds for some folks who use the company to file by April 2.
5. To save money on filing services
You likely qualify to file your taxes for free through the IRS’s Free File program, which began accepting returns on Friday. The IRS provides guided tax prep at no cost to those who meet the adjusted gross income (AGI) limit of $73,000.
But if you make more than that, have numerous sources of income, are self-employed or need to itemize your deductions, it’s likely you will need to use a paid service. And as tax season marches on, online tax prep companies have a history of hiking their prices.
A Money analysis in 2020 found that these companies tend to use surge-like pricing that’s lower at the beginning of tax season and higher the closer we get to April — and it’s not clear exactly when the prices will change.
Filing prices often jump $20 or more, and that’s an increase you can avoid if you file early.
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