3 Benefits of Filing Taxes Early

There's much to be gained by getting moving on this year's return.

There are certain tasks Americans are known to procrastinate on, and filing taxes is one of them. This year, taxes aren't due until April 18. But getting your return done sooner could work to your benefit. Here's how.

1. You can get your refund sooner

It takes the IRS about three weeks to process refunds for tax returns filed electronically. For paper returns, the turnaround time is roughly double that (though this year, you may need to wait even longer, because the IRS is still working through a backlog of physical returns from 2021 that it hasn't yet finished). The sooner you submit your tax return, the sooner you might get your money.

If you're struggling with higher-than-average bills right now, then an expedited refund may be crucial -- especially if you're living paycheck to paycheck without any money in savings. Say you're due a $1,200 refund and are right on the edge of having to rack up credit card debt to cover your monthly essentials. Getting that money could spell the difference between being forced to carry a balance (that you get charged interest on) versus having a pile of cash to use for bill-paying purposes.

2. You can make a plan for paying your tax bill

Not everyone who files taxes gets a refund. If you owe the IRS money, you should know that if you don't pay that tax bill in full by the April 18 deadline, you'll be charged interest and penalties on the sum you owe.

The good news is the IRS commonly works with taxpayers who can't pay their bills in full by setting them up with installment plans. But one of those will cost you, so you're better off getting your tax bill paid off by April 18. And if you file your tax return early, you'll know what sum you owe, and you'll have an opportunity to come up with a plan to scrounge up that money.

Say you complete your taxes two months ahead of the deadline and see you owe the IRS $600. You may not have $600 sitting in the bank. But you might be able to pick up a side hustle over the following eight weeks that lets you earn that money so you can pay it on time.

To be clear, if you file your tax return before the April 18 deadline, you still get until April 18 to pay whatever sum you owe before interest and penalties start to accrue. Or, to put it another way, the IRS won't penalize you for being early with your taxes by forcing you to pay early.

3. You can potentially avoid fraud

Tax fraud can take on different forms. Sometimes, what criminals will do is get a hold of your personal information, including your Social Security number, and attempt to file a tax return in your name. If they succeed, they can route your refund to their own bank account and cause you a hassle.

But if you file your tax return early, you might stop a criminal in their tracks. The IRS's system is set up to detect and reject duplicate tax returns. If you file your taxes, and a criminal then files a return using the same Social Security number, that second return will get bounced back as a duplicate, leaving you without a problem.

Getting moving on your taxes could benefit you in a number of ways. If you've yet to get the ball rolling, carve out some time in the next few weeks to tackle your return -- and have one less thing to worry about once it's done.