Tax Extension: How to file a tax extension?). Because of COVID-19 and the related economic shutdown, the IRS granted all U.S. taxpayers with April 15 due dates an automatic tax return filing extension to July 15 (Please see Coronavirus (COVID-19) Tax Impact - Relief from timely filing of 2019 Federal income tax returns). However, while your tax return is now due on July 15, you should still file your 2019 tax return early.
Like any task, it may be tempting to procrastinate filing your tax return, but by doing so, you may face issues later on relating to your taxes and information. Therefore, you should file your tax return as soon as possible. Below are four reasons why it is beneficial to file your tax return early.
- The Complete List of Tax Credits for Individuals
- File your taxes online for free: The IRS Free File Program Explained
- Tax Filing Guide: How to determine your tax filing status?
- Guide to Taxable Income for Individuals: How to calculate your taxable income amount?
Four Benefits of Filing Your Taxes ASAP
1. Financial BenefitsThe most exciting part of the tax filing season is the tax refund. Well, the sooner you file your tax return, the sooner you will receive your tax refund. If you are eligible for a tax refund, once the IRS accepts your tax return, you will typically receive your tax refund within 21 days (Please see: Tax Refund Schedule: When should I receive my tax refund from the IRS?).
By receiving your tax refund early, you can now make smart and timely financial decisions. If you have have debt, pay off the debt with your tax refund, which will save you money by lowering principal and related interest expense. If you have a retirement savings account, contribute the tax refund to your IRA or 401(k). If you have a brokerage account, invest your tax refund in your preferred investment types. If you have a large future purchase, use the tax refund towards the payment.
Overall, people have a need or purpose for money; therefore, it is beneficial to file your tax return early to receive your tax refund payment as soon as possible.
2. Tax Payment Plan and BudgetConversely, you may discover that you owe tax when filing your tax return. If you procrastinate to file your tax return until the deadline, you will have to find the money to pay the tax bill by the tax filing due date of April 15 (Tax filing due date is July 15, 2020). For people on a tight budget, this extra expense may cause a financial burden. Also, it is important to note that filing an extension extends your tax return due date but not your tax payment due date.
If you proactively file your tax return early, you will have several months to plan and pay off the tax bill. You will be able to successfully integrate the tax expense into your budget, alleviating the financial burden of the additional expense.
3. File the best possible tax return with the best filing optionThere are many tax preparation software and packages available to U.S. taxpayers. You should take time to research which software and package is best for you. Procrastinating filing your tax return may cause you to pick a software and package that does not match your needs, which will either result in you overspending or not receiving the necessary functions.
There are many tax deductions and tax credits available to U.S. taxpayers. You should take time to research which tax deductions and tax credits you may claim on your tax return. Procrastinating filing your tax return may cause you to miss those tax benefits, which will result in you paying too much tax. Take the proper amount of time to ensure you are correctly filing your tax return and getting your maximum tax refund.
All in all, proactively filing your tax return eliminates last-minute stress and results in you filing the most favorable tax return.
Tax Prep Software:
4. Protection from identify thieves and other scamsIdentity thieves, hackers, and scammers take advantage of the tax filing season. If an identify thief obtains your Social Security number, he or she can file a fraudulent tax return and steal your tax refund. This can be resolved with the IRS, but the process is long and difficult. You may also face tax return related phishing attempts via phone calls and emails.
The best way to avoid the scams is to file your tax return early. Once the IRS accepts your tax return, you are safe from fraudulent tax return attempts. Also, you can confidently ignore any phishing attempts related to your tax return.
In conclusionYou should be proactive during tax season. I hope the four benefits discussed above helped motivate you to file your tax return early. Please share with others to teach them the benefits of filing your tax return as soon as possible.
As always, please comment below if you have any further questions about the post.