You’ve heard the old adage that “the early bird gets the worm.” But do early tax filers gain any benefit by being among the first in line with the IRS -- especially when conventional wisdom says not to give any money to Uncle Sam until you absolutely have to?
The answer, according to Lisa Greene-Lewis, a certified public accountant and tax expert at TurboTax, depends on the person filing his or her taxes.
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“Many people do like to get a big tax refund as soon as possible,” Greene-Lewis tells TheStreet host Gregg Greenberg in this special video series with TurboTax. “Last year, 72% of taxpayers received a tax refund close to $3,000.”
Greene-Lewis says early filers use their refunds for good reasons – to pay off debt or start an emergency fund, for example. But that’s not the main reason to file early. “Overall, it’s best to file your taxes early so you know how much you owe, if anything,” she says. “Additionally, if you do owe money to the IRS, there are strategic tax moves you can make to reduce your tax burden.”
“For example, you can contribute to your IRA right up to April 15, which would lower your taxes for 2019,” Greene-Lewis adds.
If you do owe taxes and believe you need an extension on your taxes, know the rules.
“You can file an extension on your taxes but you can’t get an extension to pay any money you owe,” Greene-Lewis says. “That’s a misconception among many tax filers.”
Instead, work with the IRS to open an installment agreement where you pay a fixed percentage of your taxes owed over a period of time. “Usually, the IRS will allow you to pay what you owe over a period of six years,” Greene-Lewis says.
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