Get Your Taxes Done: The Advantages of Filing Early

Every year, millions of Americans engage in our real national pastime -- procrastinating on our taxes until the last minute. But before you resign yourself to running out to the post office at 11:59 p.m. on April 17 to beat the filing deadline, you should be aware of the benefits of getting your taxes done early.

The biggest reason to file your taxes pronto is if you expect a refund. Early filing no only means you'll get yourself in line to get your refund sooner, but it also can have an impact on how quickly the IRS processes your return. If you wait until mid-April, then you may have to wait longer as the IRS deals with the last-minute deluge of filings.

Also, early filing is the only way to take advantage of a relatively new option the IRS offers. You can have your refund deposited directly into an IRA or health savings account and still have the money count toward your 2011 contributions -- but only if you file early enough to have the refund-transfer done by the April 17 deadline.

Need another reason to get your taxes ready early? How about to make it easier to get professional help on your return. If you use an accountant or tax preparer, scheduling during the last month of tax season can be a nightmare. The sooner you're ready to go, the better the chances that you'll get the help you need.

Finally, doing your taxes now ensures that an unexpected mid-April crisis won't leave you late in getting them done. Although you can apply for an extension, if you haven't paid enough by the April deadline, you could end up owing the IRS interest and penalties.

Counterpoint: Reasons to Wait

On the other hand, a few taxpayers have good reasons to wait before filing.

If your tax return is complicated due to factors like running a small business or having unusual investments, then you may not get the tax forms you need to complete your return until close to the April deadline. Even worse, in some cases, tax forms you've already received may turn out to have incorrect numbers. If you've already filed before you get the updated forms, then it creates a real hassle.

But psychologically, nothing's better than having your tax returns finished. Even if you owe money and decide to put off filing, having the envelope ready to go or the e-file form ready to send makes your life a lot easier.

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Motley Fool contributor Dan Caplinger is finishing up his taxes now. You can follow him on Twitter here.