Updated Feb. 20, 2019
We're well into the 2019 tax filing season and things have been a little slow, thanks in large part to the longest government shutdown in U.S. history that hampered Internal Revenue Service preparations for the millions of tax returns it receives each year.
Still, millions of taxpayers already have filed their returns. After the second week of the filing season, which ended on Feb. 8, the IRS had received almost 29 million returns.
Most, if not all, of those filers were expecting refunds, although some were unpleasantly surprised. At least, though, they have their taxes out of the way.
Whatever your personal tax circumstances, it can be a good idea to follow the example of these tax eager beavers and file your Form 1040, which has been redesigned this year, earlier rather than later in the tax season.
Here are six reasons to file early, along with, thankfully, one that's no longer applicable.
1. To get your refund sooner.
As noted earlier, refunds are why most folks file early. To get that money even sooner, the IRS recommends you file your return electronically and have the refund directly deposited into a bank or other financial institution account.
This method, says the IRS, allows the agency to send out most refunds within 21 days of processing. Filing the old-fashioned paper way could add weeks to your refund delivery.
The IRS is working to keep to that three-week electronic tax return/refund turnaround even though its usual filing season operations have been hampered by the shutdown.
Also remember that regardless of how your file, the IRS must hold until mid-February any refunds from filers who claimed the Earned Income Tax Credit and/or the Additional Child Tax Credit. Still, getting your return with these credit claims into the IRS sooner will get you at the front end of that delayed refund issuance line.
2. To figure out how to pay what you owe.
A lot of folks delay filing because they know they owe taxes. But filing early actually can help here. And that's particularly true this filing season.
When you fill out your tax return, you'll know exactly how much you owe Uncle Sam.
Anecdotal reports from my tax professional pals, as well as on social media, indicate that some taxpayers this filing season are facing unexpected tax bills. In some cases, the tax bills are because of Tax Cuts and Jobs Act (TCJA) changes.
Some filers didn't adjust their withholding last year to account for the changes, which included the loss of personal exemptions and changes to the child tax credit. Others found that even with increased standard deductions, they do better by itemizing. That method, however, is not as beneficial as it was, again due to reduced or eliminated Schedule A claims under the TCJA.
Whatever the reason for an unexpected tax bill, when you're armed with specific tax dollar knowledge, you can figure out how to come up with the cash. Do you need to raid an emergency savings account? Or borrow from a family member? Or put it on a credit card (don't forget to take the fees into account!)? Or set up an installment payment with the IRS?
Remember, too, that you don't have to send that tax due amount when you file your form early. You still have until the April deadline to send in your due taxes.
You can send that amount due, shown on the "Amount you owe" line (#22 on page 2 of the revised 1040 form), later electronically via the various e-payment options accepted by the IRS.
Or if you decide to send your tax payment via check or money order after filing your forms, you'll need to complete and include with your payment Form 1040-V payment voucher.
3. To beat tax ID thieves to the punch.
The IRS and its Security Summit partners have made good progress in recent years in reducing tax identity theft and refund fraud. This filing season, the IRS says stronger protections for taxpayers and the tax system are in place. Many changes will be invisible to taxpayers, says the IRS, but will help the federal agency, state tax departments and the tax industry provide additional protections and tighter security requirements to better protect tax software accounts and personal information.
Such efforts are welcome, but they haven't stopped this crime, which regularly is among the top consumer complaints across the country. Tax crooks are innovative.
They also have long known that an early fake filer has a better chance of stealing the rightful taxpayers' dollars. That means all us real filers must act faster, submitting our returns before criminals use stolen Social Security numbers to submit fraudulent returns in order to steal fat, fake refunds.
When that happens, the IRS will kick out your legitimate return since their records will show that you've already filed and been sent "your" refund. Clearing up the fake tax filing mess can take time, time that you're without your legal refund.
4. To find a tax professional.
If you need the help of an educated, experienced tax professional to finish your return, you're more likely to find that help earlier in the tax season. As the filing deadline nears, it's generally tougher to get on a good tax pro's schedule.
In fact, as filing crunch time nears, if you can hire the tax pro you want, he or she probably will have to file an extension for you because they are working on the returns of other clients, who came to them earlier.
There's also the economics of hiring a tax pro earlier in the season. Most tax preparers will charge more to work on returns as the filing deadline nears.
5. To get to work on your state taxes.
I live in Texas, one of the handful of states doesn't impose any type of income tax. But most Americans have to also file state tax returns in additional to their federal 1040s. In most of these tax-collecting states (and the District of Columbia), your federal return is the foundation for filing your state and local taxes.
Also this filing season, the TCJA changes have produced new issues when it comes to state taxes. So the sooner you get your federal return done, the sooner you can tackle your state and local tax counterparts.
6. To clear the tax deck and start focusing on your 2019 taxes.
Taxes always force us into a balancing act. At this time of year, we're working on last year's taxes while also trying to make moves this year to cut the amount we'll owe when we file our 2019 returns next year.
The sooner you can be done with the 2018 tax year, the sooner you can focus on 2019's necessary tax actions. Your 2018 return results also will make it clear just how the TCJA changes affect your tax situation, providing additional guidance for your 2019 taxes.
Shutdown finally shut down: When I first posted this back in early February, we all were still on edge as to whether the government, and IRS operations, would be shuttered once again. Back then, that was the number one reason to file your taxes early.
Thank goodness cooler heads in Washington, D.C., prevailed (this time) and that reason no longer exists. The IRS and eight other agencies and departments are now fully funded through Sept. 30.
Let's keep our fingers (and toes!) crossed that we won't face another possible IRS closure again at the end of the fiscal year in September. If we do, you know what that means.
We'll have a shutdown while millions of tax procrastinators are finally getting around to filling out their 1040s in order to meet the Oct. 15 extension deadline!
You also might find these items of interest:
- Key 2019 tax filing (and paying) deadlines
- Free File 2019 is open with taxpayer protection upgrades
- IRS offers tax penalty relief to some who didn't have enough withheld or paid too little estimated taxes