Every April, taxpayers procrastinate and wait until the last minute to file their tax returns. According to the IRS about 28 percent of taxpayers wait until these last weeks to prepare their taxes.
If you're among those that procrastinated this year, here are six reasons to file your taxes before the April 15th tax deadline.
Faster refunds. One of the most common reasons to e-file your taxes before the tax deadline is to receive your tax refund as soon as possible. Last tax season about 75 percent of taxpayers received a tax refund close to $3,000. Filing your return electronically with direct deposit into your bank account is the fastest way to get your precious tax refund! It can take up to several weeks longer for paper returns, but according to the IRS, 9 out of 10 taxpayers that e-file with direct deposit receive their tax refunds in 21 days or less.
It's easy. You can easily and accurately file your federal taxes online in the comfort of your own home, and for the millions of taxpayers with simple tax returns you may be able to file for free, saving you hundreds of dollars versus going to a tax store. The IRS recently reported that taxpayers who file their own returns from their home computers have increased approximately 6 percent compared to last tax season. There's no reason you can't be one of the millions that accurately files your own taxes, without ever leaving the house, while also saving money on tax preparation fees. You can even e-file your tax return up until 11:59 on April 15th and make the tax deadline.
Extension to file isn't an extension to pay. An extension will give you extra time to file your return, but any amount you owe is still due by April 15th. An extension can help reduce penalties, but any outstanding balance will normally be charged a failure-to-pay penalty (0.5 percent per month) and garner interest (right now at three percent annually). And let's be honest, nobody wants to pay Uncle Sam a penny more than necessary. E-filing your tax return by the tax deadline helps you avoid this situation.
Extra time to pay balance due. If you owe a balance due to the IRS, you may still have a good reason to file your return as soon as you can. For example, if you submit your return now, you would not have to pay your balance due until the tax filing deadline on April 15th. Preparing your taxes before the deadline will give you time to arrange your payment. This extra time is particularly helpful to taxpayers who need to find out exactly how much they will owe the IRS. The IRS also has the Fresh Start initiative, where you can e-file your taxes by the tax deadline and get an installment agreement with the IRS to make payments on the taxes you owe for up to 72 months.
Obtaining financial information. If you are expecting a big life change, such as purchasing a house or returning to college, preparing your tax return before the tax deadline can help you obtain essential information. College students use the information from their Form 1040 to apply for financial aid, while prospective homebuyers often have to show their completed tax return as proof of their household income. Getting your tax return done before April 15th -- whether you owe money or expect a refund -- gives you a head start on the important documentation you will need for these life changes.
Feel a sigh of relief. Until you prepare your return, it will just loom over your head like a dark cloud. Once you've prepared and filed your tax return, you can put a smile on your face and celebrate that your taxes are done.
Do you have other questions about why you should file in time for the April 15th deadline? Be sure to visit the TurboTax blog, or leave me a comment.