Benefits to Preparing Your Tax Return Early

Ideally, organizing your tax documents throughout the year makes for a less labor intensive tax season. If you have yet to start, there is no better time to start then right now. 

Tax pros everywhere urge you to gather your information and get it in early. Why? It benefits you the most! Whether you are receiving a refund or expecting a tax liability, there are benefits to preparing your taxes early. 

Here are just a few:

More Time with Your Tax Professional

Based on newly released IRS statistics over 84 million tax payers file their income taxes by mid-March. The remaining 53 million individuals have one month to file their returns by the deadline. The amount of time available to clients with their tax pro is essentially cut in half. If you were one of those people, you found out the hard way that it’s tough to get on your tax advisors schedule after mid-March. Furthermore, you most likely will have to file an extension if you haven’t set an appointment with your accountant by this time.

Schedule an appointment with your accountant as soon as possible to steer clear of all that hassle.

More Time to Plan If Tax is Due

Filing your return early maybe the last thing on your mind when you know you will owe taxes. If you do decide to go ahead and file, you’ll know your exact balance due. You also do not have to pay the full liability until the filing deadline of April 15th. 

You can make a plan to get your tax bill paid before the deadline or if you need to arrange payments, this will mean that any payments made before the deadline won’t be considered late. 

Up to Date Financial Information

Big life decision and happenings such as preparing for college (for you or your children) or buying a new home means a current tax return can help you. Financial aid applications may require current year tax returns. Most individuals require tax returns as proof of household income. Having your return prepared early gives you an advantage during these processes.

Higher Refunds

Based on the IRS statistics, returns filed by late February receive higher tax refunds then those who filed later. These statistics include individuals who anticipate a refund each year and are eager to collect. Many filers are also more likely to file early because it allows time to gather further information without the pressure of the tax deadline. There is also more opportunity to claim credits and deductions they may be eligible for. 

Faster Refunds

The sooner you file your taxes, the faster you receive your refunds.

The fastest way to receive your refund is electronically filing with direct deposit into your bank account. Paper returns can take several weeks longer to process. 

The IRS begins accepting individual tax returns typically the last week in January and the deadline to file is April 15th for individuals and corporations (deadline for partnerships and S corporations is March 15th).

Avoid Tax Refund Theft

What is tax refund theft? Tax-related identity theft is when someone uses your Social Security number to file a tax return and receives your refund.  

Tax refund theft is the most common type of identity theft. One very effective way to avoid this is by filing early. 

Filing an accurate and complete return is recommended. Filing an incomplete return may flag you for an audit. 

Often these criminals are using a highly automotive system to prepare and file a tax return electronically to generate a tax refund quickly. If you file first, they are unable to file electronically without the IRS rejecting their tax return. This does not mean you are in the clear from identity theft. If your identity has been stolen you should still take the proper steps to resolve the issue.

For more information and what to do if you this happens to you go to https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft .

Avoid Penalties and Interest

To avoid unnecessary IRS penalties and interest file timely. Individuals and corporations who file an extension are extending the time you have to file your return to October 15th (for partnerships and S corporations to September 15th); however, it does not extend the balance due on your return if you owe money to the IRS. Tax liabilities are still due by April 15th. The IRS will charge you penalties and interest on outstanding tax debt until it is paid in full.

There are many ways to stay organized throughout the year to ensure you are ready to hand in your tax documents with time to spare. Call me today to schedule a free consultation! Let’s make sure you are ready to file your taxes early this year!