7 Benefits of Filing Taxes (Sooner)
Every year a lot of Individuals and Businesses end up filing extensions. An extension provides six additional months to file the taxes, but please remember the extension is only for filing the taxes, not to pay the taxes. If you owe taxes, you are expected to pay along with the extension filing. A taxpayer can always file tax returns earlier than the deadline. There are various benefits of filing taxes sooner than later.
- Avoid Penalty – If you owe taxes and pay them later penalty will apply. If you file earlier, penalties can be avoided
- Get the Refund sooner – The earlier you file your taxes, the earlier you get the refunds
- Better Planning – Filing the taxes earlier will also help in planning next year’s taxes and business finances
- Identity thefts – File your taxes early to avoid identity thefts and tax fraud
- Financing options – Every bank asks for the past 2-3 years’ Tax return when applying for loans. Early filing of Tax returns can help in your options for Working Capital availability
- Retirement Planning – You can choose to contribute to Solo 401K, SEP, etc sooner along with the tax filing and plan better for the retirement plans
- Avoid deadline stress – The later (closer to the deadline) you file taxes, there are more chances of making mistakes and processing delays. File early to avoid such delays and stress
I would like to emphasize that everyone’s situation is different so it’s important to fully consider your specific situation before deciding. The list does not guarantee a specific benefit but rather recommends filing the taxes sooner.