If you’ve been debating whether to file your taxes early this year, tax experts say there are now several reasons that might be a good idea.
The biggest one is the rise in tax-related identity fraud. Kelley Long, a certified financial planner and certified public accountant, said the odds that a bad actor will gain access to your Social Security number have seemed to increase alongside the growing number of high-profile data breaches.
‘It’s safe to assume your Social Security number is in the hands of someone you don’t want to have it,’ Long said. ‘Whether you’ll be a victim is kind of up to chance.’
Anjali Jariwala, who is also a certified financial planner, a public accountant and the founder of FIT Advisors in Torrance, California, said fraudsters have extra incentive to submit fraudulent tax returns as quickly as they can. As a result, legitimate filers could be ‘running against the clock’ to file valid returns.
Filing earlier, Jariwala said, ‘minimizes the chances of someone else filing a return on your behalf.’
‘The IRS will automatically kick out [the fraudulent return] because they know a return has already been filed with your Social Security number,’ she said.
If you are exposed to identity theft-related tax fraud, the process to file your real return could be onerous, she said. In addition to having to provide the IRS with a host of additional information, you may be asked to file your return the old-fashioned way — using paper and the mailbox.
There are other reasons filing early could prove beneficial, especially if you’re owed a refund. The backlog of returns the IRS needs to process starts to accumulate in April, Jariwala said. The earlier you file, the quicker you’ll get your refund. For many people who expect larger refunds, she said, filing early will help pay for, or help you plan for, expenses for the rest of the year.
And even if you end up owing taxes, filing early allows you to figure out withholding for the rest of the year, Jariwala said.
Long added that some filers delay sending in their returns until Tax Day because they don’t want to pay right now, but, she said, you have options there, too.
‘You can file your return today and set your payment up for a later due date,’ Long said.
