67% of Americans Plan to Make This Smart Tax Move
AP

67% of Americans Plan to Make This Smart Tax Move

{{featured_button_text}}
67% of Americans Plan to Make This Smart Tax Move

Though 2019 tax returns aren't due until April 15 this year, the IRS recently announced that it will begin accepting returns on Jan. 27. And if you have your paperwork in order, it pays to file your taxes at that point, or shortly thereafter. In fact, 67% of Americans intend to file their taxes in January or February, according to a recent FinanceBuzz survey. And that's a smart move you should consider for a number of reasons.

1. You'll get your refund sooner

The sooner you submit your tax return, the sooner you can anticipate your refund hitting your bank account. The IRS typically issues refunds for electronically filed returns within three weeks. For paper returns, the turnaround is about twice as long. But either way, having that refund sooner could save you serious money in the event you're currently sitting on debt (which is the case for a large number of Americans coming off the holiday season).

IMAGE SOURCE: GETTY IMAGES.

Even if you're not dependent on your refund to pay off a credit card balance or tackle a specific bill, the sooner that money is in your savings account, the sooner you can start earning interest on it. And if you put that money into a retirement savings plan, you can put it to work for you right away by investing it.

2. You'll have time to come up with a plan if you owe money

Though most tax filers receive a refund each year, you may land in a scenario where you owe the IRS money -- and the sooner you're made aware of it, the sooner you can scramble to come up with the cash to pay your tax debt.

Imagine you file your taxes a few days before they're due and realize you owe the IRS $1,000. You may not have that money sitting in savings, in which case you'll risk penalties for paying your tax bill late. On the other hand, if you discover in early February that you owe that $1,000, you'll have two and a half months to cut back on spending, pick up a few extra shifts at work, ramp up your side hustle, or do whatever you need to do to free up that cash.

Remember, you don't have to pay your tax bill the day you file your return, so if you submit yours in February, you still have until April 15 to come up with that IRS payment. Penalties on unpaid taxes don't apply until after April 15.

3. You'll potentially avoid fraud

If your personal information is hacked, one thing a criminal can do with it is file a tax return in your name and divert your refund to his or her bank account. Then, when you go to file your legitimate return, the IRS will likely reject yours, since it will already have a return with your Social Security number on file. The benefit of filing your taxes early is that you may beat criminals to the punch in this regard. And if your tax return is the one that gets into the IRS's system first, you won't have to go through the motions of proving your identity if someone tries to file a fraudulent one in your name afterward.

Filing your taxes early is a great way to get one potentially unpleasant task over with. If you have all of the documentation you need to complete your return, you might as well carve out the time to check it off your list.

The $16,728 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

The Motley Fool has a disclosure policy.

0
0
0
0
0

Be the first to know

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

MoneyTips

Every direct employee of a company should receive a W-2 form in January. The W-2 is the base document that defines your tax obligations, so it is important that you review and understand yours. However, some people are confused by some of the form's numbers — for example, why the wage listed on a W-2 form does not always match their salary — and simply fill in the information from each box into their tax forms without giving it a thorough review to verify that the information is correct.

Employers can and do make mistakes on W-2s, and these errors can cost you money as well as time and effort to correct downstream tax ramifications. Let's take a look at the W-2 form in a bit more detail.

Understanding Your W-2 Tax Forms

First, verify the pertinent baseline information in the spaces labeled with letters, namely your Social Security number and both addresses (yours and your employer's). Assuming that's correct, look at the block of eight boxes in the uppe...

No W-2 Tax Form? What To Do

What To Do If You Are Audited

Why Can't the Government Provide Your Tax Data?

  • Updated

MoneyTips

If you're a traditional employee, every year you receive a W-2 form from your employer that records your earnings for the year and the amount of taxes withheld from those earnings. IRS 1099 forms are complements to the W-2 form for non-traditional employee relationships. They are generally designed to record sources of income that have not been subjected to withholding – in other words, sources where an employer has not already paid the corresponding taxes.

If you are self-employed, you know the IRS form 1099-MISC that reports payments made to you over the course of the year. However, there are many different types of 1099 forms – and not all of them increase your tax bill.

SSA-1099 – Your Social Security benefits are recorded here. No more than 85% of your benefits can be s...

How Seniors Should Handle A 1099-C

Top 12 Mistakes To Avoid In Tax Planning

Do You Qualify For An Earned Income Tax Credit?

Get up-to-the-minute news sent straight to your device.

Topics

News Alerts

Breaking News

Crime

Entertainment & Dining

Latest News

Local Sports

NWI Prep Sport News

Weather Alerts