Fraud

Why You Should File Your Taxes Early in 2019

Whether you prepare and file your taxes yourself, or pay someone else to do them for you, doing your income taxes is probably not one of your favorite chores. Knowing you have a tax refund coming can make the whole process somewhat easier, but gathering your paperwork and ensuring the forms are completed correctly can still be both time-consuming and stressful. Avoid IRS anxiety and do the work to file taxes early. There’s nothing like being ahead of the game when it comes to filing your taxes.

How early can you file taxes?

The IRS designated January 28, 2019, as the start of tax season. That’s when the IRS began processing tax returns. Although there was a federal government shutdown early this year, the agency said it will provide refunds to taxpayers as scheduled.

The IRS allows you to file your tax return earlier than its start date for tax season. You don’t have to wait. But processing returns begins at the official start date.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019. There are exceptions:

  • Taxpayers in Maine and Massachusetts have until April 17 to file their returns because of the Patriots’ Day holiday.
  • Taxpayers in the District of Columbia have until April 17, in observance of the Emancipation Day holiday.

Software companies and tax professionals accepted and prepared tax returns before January 28. But they submit the returns on or after the opening day of tax season.

A good reason to file your taxes early

Even if there’s no tax refund to be found at the end of your tax-filing rainbow in 2019, there are still very good reasons to file your income taxes as soon as you can, this and every tax season — to try to avoid tax-refund identity theft.

Tax-refund identity theft is when someone files a tax return using your personal information in an attempt to get a tax refund. Consider this: Identity thieves only need your name, Social Security number, and your birthdate to file a tax return in your name.

The Internal Revenue Service says, in effect, the best defense is a good offense: The best thing to do is file early in the tax season — if you can — to get your refund before identity thieves try to.

Your information is already out there, exposed. And criminals can use that already exposed information to commit identity theft and financial fraud.

Your filing early may not stop an identity thief from attempting to file a fraudulent tax return using your information, but in this case, first come, first served. By filing first, your tax return will likely be processed first, and it’ll be the identity thief, not you, who receives the IRS notice that a return has already been filed using your personal information. It’s really in your best interest to consider filing your taxes early.

How to file taxes early: 3 steps

Filing your taxes early — or not so early — includes preparing your tax documents, doing your tax return, and filing your tax return. It can feel like a lot of work, but the IRS offers support online, including explaining changes in the tax code.

Here are the three main steps to filing your tax return.

  1. Prepping. Call it the gathering phase. You assemble all the documents and records you’ll need to file your federal and state tax returns. This includes your W-2s (if you have a job) and other forms such as those that document investment income or mortgage interest paid. If you itemize deductions, you’ll also gather receipts for deductible expenses, including charitable contributions or healthcare expenses.
  2. Doing. You might decide to hire a tax professional or an online service to help complete your tax return The IRS offers some guidance to find a paid preparer or e-file provider. Otherwise, it’s time to hunker down with a calculator, crunch the numbers, and fill in the blanks.
  3. Filing. The IRS recommends electronic filing as the easiest way to file a complete and accurate tax return. To do this, you may be able to use Free File on the IRS website or commercial tax preparation software. If you owe the IRS money, you can also pay electronically. You can also send your tax return to the IRS by mail. Just be sure to have it postmarked on or before the tax deadline.

Other reasons to file taxes early

Are there other reasons you may want to file early? Yes, but they may not be as compelling as avoiding tax-related identity theft. Still, they’re worth considering:

  • The sooner you file, the sooner you’re likely to receive your tax refund, if you have one coming. Again, the IRS says the fastest and safest way to get your tax refund is to file your return electronically with IRS e-File and have your refund directly deposited into your financial account.
  • Even if you owe taxes, preparing and filing your taxes early will help you determine how much you owe. And guess what? Filing early doesn’t mean you have to pay your taxes when you file. You still have until the usual mid-April tax-filing deadline. The time between when you prepare your taxes and mid-April may help you figure out how to work that tax payment into your budget. (Good luck!) When you send payment after filing, be sure to complete and include form 1040V payment voucher — a statement you send with your check or money order for any balance due on the “Amount you owe” line of your Form 1040 or Form 1040-NR.
  • Some lenders — for mortgages or student financial aid, for example — may want to see a completed tax return as proof of income. If you have such an upcoming item on your calendar, you have one more reason to file early — so you’ll have your completed tax return ready for review as part of the application process.

The IRS says it can sometimes take 120 days to 180 days to resolve tax-related identity theft cases. That’s four to six months — a long wait if you are expecting to receive a tax refund. So, if filing early means you could get in the IRS queue before an identity thief who has your Social Security number, that wait is one more reason to do so.

Staying safe this tax season

Tax season is challenging enough, and could be worse if you become a victim of tax-related identity theft.

Identity thieves may already have your exposed personal information from recent data breaches. They can use it to file a tax return using your Social Security number, name, and date of birth to obtain a fraudulent tax return. That could make tax season more taxing.

Tax-related phishing and malware attacks are two additional risks you could encounter during tax season.

Phishing scams are on the rise. The IRS noted a 60% increase in bogus email schemes in 2018. The bogus emails were often designed to steal money or tax data.

In other cases, fraudsters send bogus tax-related emails with attached files. If you click on the attachment, it could install malware on your device.

Tips for staying safe

Here are some tips to help protect against tax scams.

  • When initially contacting a taxpayer, the IRS will generally send several letters through regular U.S. Postal Service mail. Beware of a house visit, phone call, or email from someone who says they’re with the IRS. It could be a scam.
  • Use a secure, private Wi-Fi network if you’re e-filing.
  • File early to beat out identity thieves who might file with your information.
  • Beware of emails from the Taxpayer Advocacy Panel (TAP). These are a phishing scam that was prevalent in 2018. Ignore any tax payment demands for gift cards or other specific payment type.
  • Shred all documents with sensitive information, such as your date of birth or Social Security number.
  • Regularly check your credit report for suspicious activity, a possible indication of identity theft.

Scam watch: things the IRS would never do

Fraudsters sometimes impersonate the IRS to trick taxpayers. Here are things the IRS would never do — common tactics for scam artists.

  • Demand payment in a specific way (credit, cash, etc.)
  • Ask for credit or debit card numbers over the phone.
  • Demand payment without giving you time to review the owed amount.
  • Make threats about involving the police or arresting you.

Beware of tax-related identity theft

You may be unaware that you’re a victim of tax-related identity theft until you try to file your taxes and the IRS tells you something’s wrong.

It’s smart to respond immediately to any legitimate IRS notice. And check your credit reports for other fraudulent activity. Remember, filing early can help keep you a step ahead of tax-related identity theft.

Glossary

Early tax filing. Filing your tax return before the federal tax deadline, usually April 15, and often weeks or months in advance of that date.

Late-payment penalties. A financial penalty you’ll be required to pay if you don’t pay the taxes you owe by the original tax-filing deadline.

Tax day. The day your income tax return is due to be submitted to the IRS. Tax day is usually April 15 or the business day after April 15, with a few exceptions for holidays.

Tax refund. The difference between taxes paid and taxes owed. Tax-related identity thieves may try to fraudulently claim a refund using your Social Security number.

Tax-related identity theft. Tax-related identity theft occurs when someone uses your stolen Social Security number to receive a fraudulent tax refund. You may not discover you’re a victim of this crime until you try to file your legitimate tax return online or by mail and the Internal Revenue Service lets you know a return has already been filed in your name.

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