Are there any benefits to filing early?

This article is part of our 2017 Tax Season FAQ Series – If you have a question submit it to FAQ@rmfcpallc.com, and it may become part of a future post.

There has always been a myth that folks who file earlier are less likely to be audited, or in particular, those who file an extension are more likely to be reviewed. Our experience and the data collected in various studies doesn’t show any connection in audit rate between those who file with an extension and those whose returns are in way ahead of the filing deadline. However, taxpayers must remember that filing for an extension does not extend the time to pay. Therefore an estimated calculation needs to made, and the full tax liability paid with the extension or penalties and interest will accrue.

But back to the original question, there are certainly benefits to filing early. Obviously, if you are due a refund the sooner you file, the sooner you will get your money back. But new laws have mandated that returns that include an Earned Income Credit or an Additional Child Credit will not have refunds issued until after February 15th.

The volume of returns the IRS is processing in late January and early February are not as high as the amount later in the filing season. So returns filed earlier may be completed by the IRS within a 7-10 day period, while returns filed at the peak of the season could see a processing time closer to 3-4 weeks long.

Still, there are reasons to be cautious about filing early. Despite our efforts there always seems to be at least one client who gets a corrected 1099 after submitting their return. Consequently, an amended return is often necessary to adjust for the additional information.

So there are certainly benefits to filing early, but there are also genuine concerns as well. In most cases, it depends on the taxpayer’s individual situation and their personal preference.