January 22, 2016
Robert Vieira, Dworken, Hillman, LaMorte & Sterczala, P.C.
Some Good Reasons to File Your Tax Return Early
Tax season is upon us. Some people dread this time of year and procrastinate to the last couple of weeks or days till the tax return is due. As a taxpayer there are many advantages to filing your return as early as possible. One of the easiest ways to get your tax return done early is to start organizing during the year and provide your tax documents to your accountant as soon as possible. Fully completing the tax organizer you are provided reduces follow up questions and allows your return to be completed efficiently.
Here are 5 reasons to file your taxes early:
1. Reduce the Risk of Identity Theft
As you are waiting for your W-2 or any number of Form 1099’s you might receive, so is an identity thief. They are hoping that you don’t file your tax return early because if the thief somehow has illegally acquired your social security number it gives them time to file a false tax return. You will not find out that someone has used your social security number to file a tax return until you attempt to file your tax return and it gets rejected. The process to resolve an issue of identity thief with the IRS can take up to one year which means a delayed refund…and a lot of hassle.
2. Receive Your Refund Sooner
If you’re getting a refund, why have the government hold on to your money? That’s money you could use to help buy a new car, go on a vacation, pay down some debt, or invest. Not only will filing your return earlier mean a quicker refund, but if you also authorize direct deposit of the funds, you’ll have the money even sooner and run less risk of a check getting lost.
3. Know Your Tax Liability
So you have your taxes done early and unfortunately you owe the federal or state government money for one reason or another. Maybe your employer didn’t take out enough taxes or you had a lot of capital gains for the year. Knowing your tax liability early can help you. You have up to April 15th to invest in an IRA which could reduce or eliminate your tax liability. It also gives you time to pay the balance due. You can file your tax return early but the payment is not due until April 15th.
4. Filing for Financial Aid
If you are filing Free Application for Federal Student Aid (FAFSA) or other forms for college aid, you will need your tax return. Some aid programs have a limited amount of funds available each year so the sooner you file the better the chance you will receive the funds you need. Also, knowing how much financial aid you will be receiving can help plan how much you will have to pay for your child’s education.
5. Avoid the Cost of Filing an Extension
Getting all the necessary documents and information to your accountant early will also help avoid the extra cost of filing an extension. Sometimes a major event will happen during the year and you may need additional documents, which may take time to get. This is a good reason to communicate with your accountant and file early to help avoid long delays.
Many times extensions are unavoidable because you may be waiting for Schedules K-1, or are just unable to get everything ready in time. Keep in mind that even though you have to file an extension and it is expected that you will owe the IRS, you still need to make the expected tax liability payment with your extension or you could face penalties.
Take the opportunity to get your tax filing requirements done as early as possible in order to be well prepared for April 15th with no last minute surprises
DHL&S is a full service Certified Public Accounting and Business Consulting firm located in Shelton, Connecticut, and is a proud BRBC member.
Visit Dworken, Hillman, LaMorte & Sterczala, P.C. website or email Mike Ganino via this link to BRBC Business Directory.