Millie 
Tax season can often be a stressful time, and the urge to get it over with quickly might lead some taxpayers to file their returns as soon as possible. While filing your early tax returns can offer some advantages, such as receiving your refund sooner, it’s important to recognise that it also carries risks. Understanding what could go wrong and how to protect yourself can help you avoid costly mistakes and ensure your tax return is accurate.
1. Missing Information and Inaccuracies
One of the most common issues with filing taxes early is that you may not have all the necessary documents or information. For example, many people wait for their income statements, such as W-2s, 1099s, or other important documents that may not arrive until later in the tax season. Filing before these documents arrive could lead to missing or incorrect information, resulting in delays or amendments.
Additionally, if you’re missing other crucial forms, like receipts for deductions or credits, this could result in an inaccurate filing. Once your return is submitted, it’s not easy to make changes. If you do need to amend your return, the process can take several months, and it may delay your refund.
How to Protect Yourself:
To avoid this, double-check all documents before filing your return. Make sure you have received every necessary tax form, and gather all relevant receipts for deductions or credits. If in doubt, consider waiting until the last possible date to file, allowing you to ensure you’ve accounted for everything. Taking your time now can save you from having to file an amended return later.
2. Overestimating Your Tax Refund
Many people look forward to their tax refund, and the temptation to file early in hopes of receiving that refund can cloud judgment. However, you might not be fully aware of all deductions, credits, or other factors that could change your refund amount. Filing too early might result in overestimating your refund, only to find out later that you owe additional taxes, interest, or penalties.
For example, if your income or deductible expenses change after you file, your initial refund amount could be adjusted downward, or worse, you could end up owing the IRS money. Additionally, filing early could lead to mistakes in calculating things like tax credits or deductions, which are often revised or updated in the months before the filing deadline.
How to Protect Yourself:
Ensure that your tax situation is complete and up to date before filing. For instance, if you anticipate receiving an additional tax form or if you’re uncertain about any changes, it’s worth waiting until everything is confirmed. Talk to a tax expert before you do anything if you’re not sure about possible benefits or credits. A professional can help you avoid common errors and make sure you’re not leaving money on the table.
3. Fraud Risks and Identity Theft
Another major concern with filing early is the potential for identity theft. Scammers know that many people are eager to file their tax returns as soon as possible, so they take advantage of this by fraudulently submitting tax returns in someone else’s name. By doing so, they could receive your refund before you even have a chance to file. If this happens, it can take months for the IRS to sort things out, during which time you won’t be able to claim your refund or proceed with your tax filing.
How to Protect Yourself:
To safeguard against tax-related identity theft, make sure to use secure methods when filing your return. If you’re filing online, use reputable tax software or work with a trusted tax professional. Avoid submitting your information through unsecured or public networks. Additionally, monitor your credit and tax-related accounts regularly for signs of unusual activity, and consider placing a fraud alert on your credit report.
4. Changes in Tax Laws
Tax laws are subject to change all the time, and new rules or changes to old rules could affect how you file. Filing too early means you might miss out on recent changes or deductions that could benefit you. For example, stimulus payments, tax relief options, or new credits may be introduced after you’ve already filed, meaning you could miss out on potential tax breaks.
How to Protect Yourself:
Stay informed about any changes in tax law by regularly checking updates from the IRS or your local tax authority. You can also consult a tax professional who can help you navigate new developments and ensure your return is as accurate and beneficial as possible. Additionally, if you file early and later realise a new tax benefit applies to you, it may be worth amending your return once the full impact is clear.
Conclusion
Filing taxes early may seem like a good idea to get ahead of the game, but it’s essential to be aware of the potential pitfalls. From missing vital information to overestimating your refund, there are several ways early filing can backfire. By ensuring you have all the necessary documents, staying up to date on tax laws, and taking security precautions, you can protect yourself from common mistakes. Ultimately, whether you file early or wait, the key to a successful tax return is careful preparation and attention to detail.
