Some don’t think filing early is a big advantage, especially if they plan to get a refund and won’t be penalized for late returns. Others file extensions to defer paying taxes. Here are some of the reasons you should think seriously about filing your tax return as early as possible from year to year.
I see many people try to use their tax refund as a way to “save” money. They file their W4s to allow excessive taxes to be withheld from their check during the year to avoid having a tax debt to pay the following year and get a refund. Wouldn’t it be better for you to keep your own money from the beginning, use the funds you retain to pay off debt, spend on essentials or invest and be the one who gets paid interest? That would be my recommendation!
Don’t give the federal government an interest-free loan while you wait up to a year to get your own money back. Refunds are not savings accounts. Create an actual savings account, gain interest and save for that vacation or appliance yourself. Set up your tax contributions throughout the year, so you never give too much or too little. If you do have a rebate coming, get it as early as possible to use for your purposes and then adjust your tax allowance on your W4s for next year.
Additionally, if you expect a stimulus check this year, it’s tied in with your tax return. Early filing also allows you to set up direct deposits to receive refunds and stimulus checks more quickly.
Ability to Make Corrections or Changes
Some corrections are not easy to fix even with an extension and will always add extra processing time to your return. Whether that forces a later payment for refunds or not, it can keep you from making necessary changes or corrections before other deadlines occur. Changing a tax designation from married-filing-jointly to married-filing-single or recharacterizing your IRA cannot happen once the original tax due date passes.
Even with an extension granted by your request or a state mandate, that date still stands, and you will not be able to make amendments afterward. Doing so can cost you money. The earlier you file, the more time you have to make those changes or corrections.
Probably the best reason for early filing is that once you have your last year’s return out of the way, you’ll have your annual reports and statistics available for planning the current year’s tax strategies. It’s always better to start benefitting from your new tax plan as early in that year as possible. Waiting for April, May, or some extensions through October hinders implementing a current tax plan. Get the maximum benefit by filing as close to the beginning of the year as possible.
Are you confused about all the IRS dates and deadlines flying around? Myrick CPA stays current of all tax laws and stipulations and can help you determine just what you are entitled to, saving you money. Don’t get caught up in the constantly changing rules and laws concerning IRS tax returns. Contact us today for a consultation regarding this year’s tax returns and create an early tax plan for next year.