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Now that 2024 is in full swing, it’s time to focus on a task you (like others) might dread: filing taxes. Tax returns for 2023 are due this year on April 15. However, the IRS will allow filers to submit a return as early as Jan. 29.
You may not be in a position to get your tax return done by late January, since that’s only a couple of weeks away. But it still pays to file your taxes well before April 15. Here’s why.
1. You’re likely to get your refund sooner
A tax refund isn’t a gift from the IRS. Rather, it’s money you earned in 2023 that the IRS has been holding.
If you have bills to pay or large purchases to make, you’re apt to want your refund as early as possible. So the sooner you file your tax return, the sooner that might happen.
The IRS says that most tax refunds are issued within 21 days. You may receive your refund sooner if you sign up for direct deposit. Just make sure to enter the correct savings or checking account details if you do.
That said, if you’re claiming a specific tax credit called the Earned Income Tax Credit, the IRS is obligated to withhold your refund for a specific period. Refunds for filers claiming this credit will be available beginning Feb. 27. And to be clear, that applies to your entire refund — not just the portion of your refund that relates to that credit.
2. You’ll have time to come up with a game plan if you owe the IRS money
Getting a tax refund isn’t a given. Perhaps you underpaid your taxes in 2023 and will have to write the IRS a check this season. The sooner you know about that, the sooner you can take action to come up with those funds.
Data from SecureSave shows that 63% of Americans don’t have enough cash on hand to cover an unexpected $500 bill. So if you put your tax return together and find that you’re looking at a $1,000 underpayment, you might end up in a tough spot. If you come to that realization in February instead of April, you’ll at least have time to work through some options (such as picking up a second job).
3. You may lower your chances of fraud
Unfortunately, tax fraud in the U.S. is alive and well. Last year, the IRS flagged more than 1 million tax returns for identity fraud.
If you file your tax return earlier in the season, and a criminal then attempts to file one in your name later on using your Social Security number, that second return should be flagged as a duplicate and get rejected by the IRS. But if a criminal beats you to the punch, your legitimate return could get rejected. At that point, you’ll have a hassle on your hands, as you’ll need to report that fraud to the IRS and work with the agency to get things resolved.
Make sure you’re ready to submit your taxes early
Filing taxes early can be beneficial. But before you submit yours, you’ll need to make sure you really have all of the information you need for an accurate filing. Specifically, you’ll need to make sure you have:
- Your W-2 wage summary if you’re a salaried employee
- 1099 forms summarizing freelance income you earned in 2023
- 1099 forms from your bank and brokerage account if you earn money in these accounts
- All other documents related to deductions you may be claiming, such as a summary of the mortgage interest you paid in 2023
Keep in mind that financial institutions are required to send 1099 forms by late January. But those forms are also sometimes subject to amendments.
Before you submit your early return, check your 1099s against your records for accuracy. You don’t want to have to go through the process of amending your return due to an incorrect 1099 form if you can avoid it.
All told, it’s generally in your best interest to get your taxes done as soon as you can. In the coming weeks, start gathering your paperwork and make an appointment with your accountant so you can check this necessary task off of your list.
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