3 Benefits of Early Tax Filing

Tax season is underway, so get your paperwork in order to get a jumpstart on the filing process. Just be prepared to see some major potential Changes with your 2022 tax return — as many COVID-19 pandemic-related benefits have expired.

“Refunds May Be Low in 2023,” Internal Revenue Service (IRS) to warn By November. “Taxpayers will not receive an additional stimulus payment with their 2023 tax refund because there was no economic impact payment for 2022.”

But don’t worry. There are still several ways you can Get a big tax refund.

The best way to prepare for tax season is to have a thorough understanding of your financial records and How to file your taxes. If you are admittedly not a tax expert, you may want to consider outsourcing. Use tax preparation software to get started. Create an account and upload your documents ahead of time so you don’t have to stress later.

3 Benefits of Early Tax Filing

There are several reasons why you might want to file earlier. Plus, it’ll give you peace of mind that you’re not scrambling to complete the process in the spring.

The IRS specifies three Benefits of filing your taxes early:

1. Avoid fines
2. Avoid losing refunds in the future
3. Protect your credit score

Avoid fines

For the majority of Americans, tax returns are due on Tuesday, April 18 IRS note Some taxpayers living abroad and disaster victims may have different deadlines. Storm victims in Alabama, California and Georgia are being offered an extension to May 15 for various tax return filings.

If you are unable to pay or file on time, you should Request an extension. It is not unusual for US taxpayers to file their tax returns at the last minute. last year, CBS News reported In any given year, 15 to 20 million people file their returns a week before the deadline.

Although tax day may seem far away, the date can quickly sneak up on you. Don’t let filing your taxes fall on your to-do list. With a site like TurboTax, you can find easy step-by-step instructions for filing online.

If you fail to meet the IRS deadline, you may face penalties.

“The penalty you owe is a percentage of the tax you didn’t pay on time,” the IRS explains online, noting that the penalty for failure to file on time is “5% of the unpaid tax for each month or part” of a month’s tax return. is late.” However, the penalty won’t exceed 25% of your unpaid taxes, the IRS says. You can Learn more about how the IRS calculates penaltiesEspecially for failure to pay or failure to file, online.

There’s a chance you won’t have to pay a fee for filing or paying your taxes late if you can prove you had a valid reason for the delay. Visit the IRS website for details.

Avoid losing refunds in the future

Don’t miss out on using your tax refund in the future. The IRS explains, “Part or all of the refund is first used to pay any taxes owed.”

Filing your taxes is especially important if you owe money. Use a tax prep site to get started.

“Many people may lose their tax refund because they haven’t filed a federal income tax return. By law, there is only a three-year window from the original due date, usually the April deadline, to claim their refund,” the The IRS says. After the three-year period has passed, the US Treasury will receive the money.

Protect your credit score

As you may know, there are many factors that affect your credit score — from spending habits per loan per Balance Transfer And more But did you know that failing to pay your taxes can also affect your credit?

“If the IRS files a tax lien against a taxpayer, it can affect the credit score and make it difficult to get a loan,” the IRS warns.

In a separate post online, the IRS explains that a lien is a legal claim against your property to make sure you pay your debt. “A federal tax lien is created when the IRS assesses a tax against you and sends you a bill that you ignore or refuse to pay. The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has seized your property. have legal rights,” the agency States.

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If you can, try to file your taxes early so you don’t get into trouble in the future. It will save you time and possibly money if you file before the deadline.

The IRS agrees, “Taxpayers should file on time, even if they can’t pay the full amount due. Then, they should pay the rest as soon as possible. Remember, the sooner you pay, the less you owe.”