1. Get your money back sooner
It feels like we wait forever to get our tax refunds back, so why not file as soon as you can to get yours even earlier? According to Elaine Phelan, a professor of accounting at Siena College in New York, you’re more likely to get your money back in shorter amount of time if you file earlier than someone else who files a month or two later.
“If you work with a paid preparer, they are excited to jump into the new year and will enthusiastically get your taxes done quickly,” Phelan said in an interview with U.S. News and World Report. “If you are expecting refunds, the IRS processing centers are less busy and will process your claim faster, so you might even get that refund sooner.”
U.S. News also pointed out that taxpayers who file online instead of through the mail are likely to get their money back even faster.
2. Reduce the likelihood of errors
Filing your taxes early can also help you catch any mistakes in your return before it’s too late. By giving yourself plenty of time to review your form to find and fix any errors. John Hewitt, the founder and CEO of Liberty Tax Service, wrote that the most common tax return mistakes are wrong figures (such as incorrect or transposed numbers), selecting the wrong filing status and failing to claim all credits or deductions, which can lead to refunds that are either too low or high.
3. Avoid identity theft
Possibly the most compelling reason to file your taxes early is to lessen the possibility of identity theft. False tax return scams are one of the most increasingly menacing forms of identity theft out there. Earlier this year, the IRS listed it among its “dirty dozen” tax scams of 2015. In 2013, the IRS paid $5.2 billion in fraudulent identity theft refunds.
Identity thieves file fraudulent income-tax returns using another person’s Social Security Number. U.S. News and World Report Entrepreneur magazine writes that thieves typically file before the April 15 deadline so they can get the refund before the taxpayer does.
If the IRS notifies you of more than one return under your personal information, you can contact your tax preparer and the IRS Protection Specialized Unit. The IRS has been working to end the number of identity theft cases due to fraudulent tax returns. According to their website, the IRS stopped more than $15 million of fraudulent refunds in 2014. Because the agency has improved its processing filters, it says it has been able to stop more fraud than ever before. These filters stopped around three million suspicious returns in 2015, which was a 700,000 increase from the previous year.
Filing your taxes early is one step you can take in protecting your identity. If you’re still concerned about your vulnerability to identity theft, invest in a credit monitoring service that can alert you to certain activity on your credit files that may indicate fraud.