It is important to file income taxes before tax day primarily for these two reasons:
- To avoid penalties and interest: Filing before the deadline prevents costly IRS penalties and interest on unpaid taxes. Missing the filing deadline can result in a late-filing penalty of 5% of unpaid tax, increasing with each month of delay, which can add up significantly.
- To receive any tax refund sooner and protect against identity theft: Filing early allows taxpayers to get their refunds faster, especially with electronic filing and direct deposit. Additionally, filing early helps prevent identity thieves from fraudulently filing a tax return in your name to steal your refund.
These reasons highlight the financial and security benefits of filing taxes ahead of tax day.
