Smart TaxesSmart Taxes

5 reasons to file your taxes early

Not only can you get a refund faster by not procrastinating, it can also help you avoid fraud.

By MSN Money producer Jan 2, 2014 4:07PM

By Geoff Williams, U.S. News & World Report

U.S. News & World Report

If you like to file your taxes early and then chuckle at all the procrastinators who wait until April 15 nears, your day of reckoning is getting close. The earliest day the IRS will begin processing 2013 individual tax returns is Jan. 31, a date slightly later than usual due to the government shutdown last fall.


What are the advantages of filing early? Here's a list of good arguments from tax preparers.


A blank Treasury check (© William Thomas Cain/Getty Images)Get your money now. This is the most obvious reason a taxpayer might want to file as early as possible. But try not to fall into the trap of thinking you need the refund before the IRS can get it to you. Some tax preparation services offer refund anticipation loans, which have steep fees that eat into that refund.


You'll also likely get your money in a shorter amount of time if you file earlier than the person who files a month or two after you, according to Elaine Phelan, a professor of accounting at Siena College in Loudonville, N.Y. Early filers may only have to wait for their refund for 21 days -- the average time taxpayers have had to wait in recent years, and sometimes less, according to the Internal Revenue Service -- whereas a later filer may have to wait longer, say, 31 days.


"If you work with a paid preparer, they are excited to jump into the new year and will enthusiastically get your taxes done quickly," Phelan says. "If you are expecting refunds, the IRS processing centers are less busy and will process your claim faster, so you might even get that refund sooner."


And, of course, if you file electronically versus putting your form in a mailbox, you should get your money even faster.


It may help with financial aid. "Taxpayers with college-age children need to get their tax information early to get the maximum amount of financial aid," says Lawrence Pon, a tax specialist who owns an accounting firm, Pon & Associates, in San Francisco. He says there is a direct link between the Free Application for Federal Student Aid form and the IRS, so your tax information is sent directly to the financial aid form without you having to provide it yourself.

It may help if you and your ex-spouse are feuding. Hopefully you don't fall into this category, and it's better for each party if you can keep the IRS out of your marital strife, but Pon says that "sometimes divorced people do not agree on who claims the children as a dependent, even though there may be a court order and an agreement. Whoever files first will claim the child, and the other ex-spouse may be out of luck."


You'll lessen your odds of becoming a victim of identity theft. "The sooner you file your return, the less opportunity someone else has to file a return in your name," says Joe Reynolds, identity fraud product manager at Travelers, headquartered in New York.


He points out that some criminals have been known to break into a home or car, steal identification and then file taxes in that person's name, scoring a refund that doesn't belong to them. The odds are slim that that will happen to you, of course, but it is another reason to file earlier rather than later.


Reynolds also advises getting your refund via direct deposit "so criminals can't have it redirected to their address or steal it from your mailbox."


There's more time to catch potential mistakes. If you wade into your taxes now and discover there's paperwork you need that you don't have, or it's simply going to be a more complicated tax year than you anticipated, you may not end up filing early, but now you have more time to spend on your taxes. 


Not that there aren't smart reasons to file close to or on April 15, of course. If you owe the IRS money, there's really no financial advantage for you to give it to them any earlier than April 15. 


Still, by preparing your taxes early, you'll know earlier how much you owe and will have more time to drum up the money to pay. 


If you have a really complicated tax form -- in which case you probably have a tax consultant or accountant advising you every step of the way -- "many filing issues are resolved as the (tax) season goes on for the IRS," says Tim Gagnon, an assistant academic specialist of accounting at the D'Amore-McKim School of Business at Northeastern University in Boston. 


It's possible that if you file too early, Gagnon says, you "may need to amend filing if the IRS changes forms, instructions or interpretations."


Still, for most taxpayers who have refunds coming, filing early rather than later is the smarter decision. It is also psychologically better for many people, Pon says.


"Get the darn task out of the way" is the reason most of his clients opt for early filing, he says. He adds that it's always "nice to get something checked off your to-do list early instead of letting it fester."


More from U.S. News & World Report:


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69Comments
Jan 2, 2014 8:01PM
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The #1 reason to file early is because the government might run out of money to pay you your money back. They may decide they know better how to spend your money than you do. Oh, wait, they already do think they know how to spend your money better than you do.
Jan 3, 2014 3:16PM
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The tax code should not be so complicated that the average american has to hire a professional or purchase a piece of software to give the government it's cut of your hard earned pay. 
Jan 9, 2014 10:45AM
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Mr. Williams, unless you are an attorney, which I assume you are not, I suggest you refrain from giving legal advice, especially incorrect legal advice.  The information you stated in #3 is absolutely erroneous.  If a parent is legally entitled to claim a child for taxes, they will ultimately get the deduction.  If the other parent files first and improperly claims the child, they will either have to re-file or provide the proper parent with compensation equal to the deduction.  I deal with this on a daily basis and I hope for your sake that this article did not encourage parents who should not have the deduction to file early and claim a child because I see a myriad of lawsuits coming your way.  Good luck and I hope you do a little research before posting your next article.
Jan 3, 2014 11:24AM
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Figure taxes early as possible.  Pay in April 1st.   Depends on the situation for folks and if you have skin in the Fed spending.  Some pay in, some get paid by the feds to BE poor and HAVE kids. 
Jan 3, 2014 10:24AM
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The only reason for filing early is if you are getting money back, and if you are it might mean you are not so wise.....
Jan 9, 2014 10:23AM
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I've always been confused about one thing when it comes to taxes. Why is it an advantage to be in the position of always having a REFUND due to me from the Federal Government after my taxes have been filed?

Doesn't this mean that you have had TOO MUCH removed from your pay-check during the previous year? I've always been of the mind that I want to OWE the government on April 15th, otherwise, its as if I have given the IRS an interest free loan during the year.

Jan 2, 2014 7:27PM
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Pretty basic stuff.  You should know that filing before Feb first will not help because IRS will not accept tax returns till then.
Jan 3, 2014 1:56PM
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"In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people."


Jan 3, 2014 2:43PM
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File early with the hope you beat some ID thief that files for you and thanks to IRS "mistakes" gets a return--which leaves you being accused by the IRS of already receiving your return.
Jan 2, 2014 10:31PM
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DON'T WORRY ABOUT REFUNDS THE NEXT BIG BLUNDER WITH HEALTH CARE WILL BE HOW DOES THE IRS CATCH EVERYONE THAT DID NOT SIGN UP. THEY CANT CHEW GUM AND TIE THEIR SHOES AT THE SAME TIME LET ALONE FIGURE THIS OUT, HERE IT COMES PEOPLE ALL REFUNDS ON HOLD TILL THEY WIPE OUT THE AFFORDABLE CARE LAW. ITS A JOKE SOON WE WILL BE PAYING PENALTIES TO THE IRS AND THEY WILL TELL YOU THAT YOU DIDN'T SIGN UP PROOF OF PURCHASE NEEDED SORRY. HOPE I AM WRONG BUT I DOUBT IT. CORAVETTE
Jan 3, 2014 1:55PM
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if you owe then puch it to the deadline  if they owe you then cut back your witholdings and file early
Jan 2, 2014 9:31PM
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Hurry the obozo voters are waiting for daddy I mean the mail to deliver their reward for voting. Cant really blame considering we have the lowest labor participation rate since 1978 overwhelming debt and wall street collecting 1 trillion each year of welfare............................But never mind that you silly twat democrat.
Jan 9, 2014 10:59AM
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I'm all done...with the exception of WAITING on the government to send me 1099's for SS & FERS.

What's up with waiting until Jan. 31 to mail out these necessary documents. Everything is computerized for the government & corporations...after the month of December is closed out you should be able to mail out these documents by Jan. 15th. When I was a small business owner I had my year-end documents, W-2's, etc. to my employees & the CPA by Jan. 10. Come on people...GET WITH IT!  

Jan 9, 2014 11:06AM
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Claim an extra dependent at the beginning of the year and get your money as you earn it. Why let the govt. hold it for you all year ? They don't pay interest.
Jan 9, 2014 1:41PM
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The REAL cure for this mess if a flat tax or no tax. No more April threats from our "benevolent" government and their IRS thieves. In fact with a flat tax we could abolish the IRS and save billions of our tax dollars.
Jan 9, 2014 9:57AM
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If you have followed the other advise you have maximized the amount of taxes that you owe to the IRS without incurring a penalty or having to file estimated taxes.  Now delay filing until as long as possible to maximize the amount of time that you can use the money before the IRS can redistribute it to the dependency class.
Jan 3, 2014 2:23PM
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How can "The gov't" run out of money...when it is "The gov't"...that prints it?
Jan 9, 2014 2:23PM
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#6 You have a better chance of audit. (The IRS had quotas just like all police departments.)

Never take money advice from this pro fed.gov web site. They are delusional.
Jan 9, 2014 1:49PM
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yes pay your taxes so obummer can fund the muslim brotherhood


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