Why You Should File Taxes Early, Even If You Owe

February 5, 2018

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By now you've received your W-2s and even Statue of Libertys are dancing on street corners!  Yep, its tax time and although most Americans will get a refund and can't file fast enough, many procrastinate either because they owe money or have a hard time understanding all the forms.  But here are four really good reasons to file your taxes as soon as possible even if you owe!  #1-Protect yourself from identity theft.  There is a chance crooks could file taxes on your behalf and take your refund!  The good news is that identity theft on tax returns has dropped by about two-thirds since 2015 thanks to improve security, but it's never bad to play it safe.  #2-Get your refund sooner. To get your money quickly, file your tax return electronically. The IRS says it processes most tax returns in less than 21 days and often can process electronically filed returns faster than that. Not to mention another potential government shutdown looms in March, which would delay any refund. #3-Fund an IRA with your refund.  Follow us on this one.  If you file early enough, you can include your tax-deductible contribution to a traditional IRA on your 2017 return before funding it!  Therefore your tax liability is reduced and yore refund will be greater!  However don't forget to place those funds in your IRA by April 17th. Check with a tax preparer to make sure you do it correctly. #4-Buy time to research payment methods. If you owe taxes, don't wait until the last minute and file early too.  Knowing the amount you owe before the deadline gives you more time to plan how you’ll pay. You can pay by credit card, but you’ll get hit with a service fee of as much as 1.99% of your tax liability. If you pay by debit card, you’ll owe a flat fee, which ranges from $2.58 to $3.

SOURCE: Consumer Reports

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