It’s better to file taxes early, but not always
It is often better to file taxes early, but not always. The biggest reason to wait, of course, is that you owe the IRS money and don’t want to give them that cash early. Keeping your cash gives you weeks, or months, of interest or peace of mind. However, even in that case, you should prepare your taxes early so you will know how much you’ll need to pay.
Another reason to wait to file is to give yourself more time to check your return for accuracy. This, again, requires that you prepare your taxes before the deadline then go back to the forms after a few days to check your work. Very few people take this step but, in 2017, the IRS reported over 2.4 million math errors on returns! That means all those tax filers received a notice from the IRS requiring a correction on their return or the IRS decided to fix it for them. In either case, you have affected your bill or your refund and may have a penalty.
Unless you have another personal reason to file at the last minute, you should consider these benefits of filing right away.
If you are due a refund, delaying filing gives IRS an interest-free loan. Refunds are paid as soon as the return is processed, so filing early gets your refund early. In fact, tax refunds result from you overpaying the IRS for the year of your return, so get your money back as fast as you can.
Another reason is both scary and real. Filing taxes early can stop a criminal from tax-related identity theft. The IRS reported over 240,000 cases of this happening in tax year 2017. That means, almost a quarter million Americans had refunds send to thieves simply because the thief filed a return with the taxpayers personal information, claiming a big refund, before the taxpayer filed their own return.
If you did not know, this type of identity theft is when someone files a tax return with your name and social security number but a new address. On that return, they claim a big refund and the IRS sends out the check because it is hard for them to know if you have moved. If that happens, fixing it (and getting your proper refund) can be very complicated and take a very long time. But if you filed early, the criminals return will be rejected.
So while you certainly can delay filing, it often makes sense to file early.