Tax returns need to be filed at the proper time. If you happen to miss the deadline, then there are chances of you having to pay extra as a penalty amount for paying the taxes late. That’s why it’s always a good idea to file your taxes before the due date. This also has other advantages such as saving a few extra dollars, getting extra benefits, and escaping penalties. It all depends on when you are filing and what’s your objective behind it. 

Objective: To pay as less money in taxes as possible 

Best time to file: Before March 15

The tax software market is quite competitive and that’s why their prices keep fluctuating all around the year. 30 days before the deadline in April, they hike up their prices. The hike in prices isn’t just limited to federal returns. As the demand increases, the fees you have to pay to file state taxes will also inflate. 

Objective: To avoid penalties 

Best time to file: By the April 18 deadline

If the IRS receives your tax returns after the deadline, then it will definitely bill you extra under a late-filing penalty. They will add an extra 5% to your tax which extends for the next five months if you consecutively fail to pay taxes. They will wait and extend the deadline for five months up to a maximum of 25%. Even if you get an extension, it’s best to pay during April itself. The more you delay this, the more you owe the IRS. 

Objective: To fend off criminals

Best time to file: As soon as you have all your paperwork

The statistics may shock you but there were more than 1.4 million reports of identity theft across the country in 2021. In fact, tax-related identity theft reports are up 45% compared to pre-pandemic years. This is why tax identity theft is still a problem and can cause a lot of trouble in your life. 

Fraudsters do this when they have in hand some of your basic information and file it under your name in order to steal the tax refund. File taxes as soon as you have all the information and forms like Form W-2 and other paperwork to avoid getting scammed. This means you will have to do your taxes before January since the portals open at the end of January. 

Objective: To get your refund as soon as possible

Best time to file: Any time, but do it electronically

If you are applying for a tax refund, then avoid mailing them via postal services. Do it electronically by e-filing because the old-school way of sending paper mail can take at least six to eight weeks to process. Whereas, e-filing takes only about 21 days.