If you’ve been debating whether to file your taxes earlier this year, tax experts now say there are several reasons why it might be a good idea.
The biggest is the rise in tax-related identity fraud. Kelley Long, a certified financial planner and certified public accountant, said the odds of a bad actor gaining access to her Social Security number appear to be increasing along with the growing number of high-profile data breaches.
«It’s safe to assume that your Social Security number is in the hands of someone who doesn’t want you to have it,» Long said. «Whether you will be a victim depends on chance.»
Anjali Jariwala, who is also a certified financial planner, public accountant and founder of FIT Advisors in Torrance, California, said scammers have an added incentive to file fraudulent tax returns as quickly as possible. As a result, legitimate filers may be «against the clock» to file valid returns.
Filing earlier, Jariwala said, «minimizes the chances that someone else will file a return on your behalf.»
«The IRS will automatically expel [the fraudulent return] because they know that a form has already been filed with their Social Security number,» he said.
If you’re exposed to identity theft-related tax fraud, the process of filing your actual return could be onerous, he said. In addition to having to provide the IRS with a lot of additional information, you may be required to file your return the old-fashioned way, using paper and the mailbox.
There are other reasons why filing early could be beneficial, especially if you are due a refund. The backlog of returns the IRS needs to process starts piling up in April, Jariwala said. The sooner you apply, the faster you’ll get your refund. For many people expecting larger reimbursements, he said, filing early will help pay or plan for expenses for the rest of the year.
And even if you end up owing taxes, filing early allows you to calculate withholding for the rest of the year, Jariwala said.
Long added that some taxpayers delay submitting their returns until Tax Day because they don’t want to pay right now, but, he said, you have options there, too.
«You can file your return today and set your payment for a later due date,» Long said.