Avoid Tax Problems by Filing Your Return Early
While you may be tempted to put off filing your taxes, there are a number of advantages to filing early. To prevent errors and avoid hefty tax penalties, make sure to file your return well before the deadline.
There may still be a chill in the air, but the fact is that April 15 is just right around the corner, and that means it’s tax time. Regardless of your financial circumstances, no one really likes to file their taxes. The forms can be complicated and confusing, and the process of shuffling through documents and entering the necessary information is tedious, at best. Although you may be tempted to avoid dealing with your W2s, 1099s, and 1040EZ, there are many advantages to filing ahead of the tax deadline. Some of the benefits of early filing include:
* Receiving refunds faster–If you are expecting a tax refund due to overpayment, it just makes sense to file as soon as possible. The IRS will accept your tax return as early as January, and typically isn’t as busy as they are in April, so you may receive your refund much sooner than if you wait until later in the tax season.
* Preventing errors–When you rush to get things done, it’s always more likely that you’ll make a few slipups, and the last place you want to make a mistake is on your tax return. Filing early also gives you time to review and address any potential tax problems that you may have. Whether you’re trying to figure out tax credits or you’re managing small business tax issues, it’s much easier to straighten things out when you can take your time. On rare occasions, you may find that the information on your W2 or 1099s is inaccurate. Filing early ensures that you have time to request that corrected forms are filed with the IRS, lowering your risk of an audit. If you do happen to encounter a major issue, you may find that it is easier to get a consultation with a tax attorney earlier in the season than if you wait until mid-April.
* Avoiding fees and fines–Have you heard of Murphy’s Law? It states that “anything that can go wrong, will go wrong,” and this is especially true when it comes to filing your taxes. You may plan on filing your return on April 14, but what happens if you end up catching the stomach bug that’s going around, or if you turn your computer on just to have the entire system crash? No matter what the cause, filing a late tax return can carry some hefty consequences. If you owe back taxes, not only will you have to pay the tax debt, but you could also be responsible for a number of penalties and interest. The Failure to File penalty alone can increase the amount you owe by up to 25%! If you owe taxes, it is always better to file sooner, rather than later so that you can avoid the emotional and financial stress of stringent tax penalties.
Although some taxpayers choose to wait to file their tax returns in order to maximize interest earned on the amount they owe and to avoid having to file an amended return, it is always best to leave yourself adequate time before the deadline for resolving any potential income tax problems that may arise. In addition to avoiding added stress and financial penalties, the peace of mind you’ll get from knowing your tax return is taken care of is well worth it.