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Why you should file early

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in Small Business Tax

The early bird gets the worm.

Strategy: File your 2017 tax return sooner rather than later. The earlier you file, the faster you can put money in your pocket if you’re due a refund.

But that’s not the only reason for being an early bird. There are other plusses to consider.

Here’s the whole story: Consider that early filers get larger refunds than late filers—about an extra $300, on average. Part of that may be due to the fact you’re likely to file early if you know you’re in line for a big refund. But there’s more.

  • If you give yourself enough time, you can go through all your records to make sure you’re claiming all the tax deductions to which you’re entitled. This is especially important for 2017 returns because many deductions won’t be available in 2018 under the new tax reform law. In fact, you might be claiming a standard deduction for 2018 rather than itemizing.
  • Filing early doesn’t eliminate ID theft, but it helps. If someone steals your Social Security number and files a return under your name, the IRS computers will flag it if you’ve already filed. Conversely, if an ID thief beats you to it, it can take months to unravel the mess. But don’t rush things unnecessarily—there are valuable tax dollars at stake.
  • You can alleviate stress knowing that your tax return is wrapped up early. On the other hand, procrastinators may start tearing their hair out should things go down to the wire. The peace of mind is worth it if you’re disciplined enough to get your return done early.
  • This gives you a head start on financial planning for this year, Instead of wondering how much of a refund you’ll get or whether you’ll have to pay more to Uncle Sam, you can adjust your plans based on the actual result. Also, if you have to pay in, you can complete your return in February and then take two extra months to actually file and come up with money.
  • Finally, if you’ll be relying on a tax pro to do your return, there’s less competition for the best preparers early in tax filing season. Come April, the one you want may not be available or will be hard-pressed to provide the in-depth advice that you really need.

Tip: If you can’t file early, another option is to obtain an automatic six-month filing extension to Oct. 15. To get an extension, file Form 4868 by April 17.

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