It’s tax season once again and many of us are no doubt dragging our feet and waiting until the deadline on April 15 to file our taxes. It pays to file our taxes on time though but it is better if we file them early. Here are a five reasons why.
5 Reasons to File Taxes Early
It Forces You to Prepare Early
For most of us, filing our tax returns is a time-consuming and tedious task because there are so many forms to fill up and so many documents to attach. If you make it a goal to file early, it forces you to prepare early as well.
Preparing early enables you to catch any potential mistakes in your documents and gives you time to correct them without worrying about missing the deadline. The Bureau of Internal Revenue (BIR) has also made filing taxes easier with the new eBIRForms, so there’s no excuse for being late. Besides, getting it done already will give you peace of mind and let you focus on the other important aspects of your life for the rest of the year.
It Helps You Get Your Refunds Early
Some of us are lucky enough to get tax refunds. However, waiting to file until the end of the tax season will mean longer processing times because everybody chooses to file at the same time. Filing now, on the other hand, means faster processing which can help you get your refund back faster.
Similarly, if while preparing your documents you find out that you actually did not pay enough and that you owe the BIR money, it would be best to know earlier as well. This gives you more time to prepare the funds in order to pay your debt.
It Helps You Avoid Penalties for Late Filing
When you prepare late, you run the risk of filing late as well. Doing so will not only force you to pay your taxes but also pay penalties that the BIR will impose, usually equivalent to twenty five (25%) percent of the amount due.
The BIR also imposes payment of interest at the rate of twenty (20%) percent, or higher, per annum depending on regulations. Further, there is a compromise amount required as well amounting to no less than P 10,000.00 but not more than P 20,000.00 plus imprisonment for a period of 1 – 3 years.
It Minimizes Identity Theft and Filing of Fraudulent Returns
Identity theft has become increasingly prevalent these days and you don’t want to run the risk of somebody filing taxes under your name in order to steal refunds that may be due to you. While the odds of this happening may be slim, it pays to always take extra precaution in order to avoid further problems in the future.
It Helps Fulfill Financial Requirements
If you’re applying for any type of loan, most credit institutions will usually require you to submit your most current tax return together with your application. This shows the lender not just how much you are earning but also your fulfillment of your responsibility of paying taxes. Not being able to submit an updated tax return will lead the lender to disapprove your loan.
These reasons just goes to show that it does pay to file our taxes early. So, finish it now and do not wait until April 15 to file.