When Is The Best Time to Fill Out Your Taxes?
While it’s generally recommended to file your taxes as quickly as possible, is that always the best course of action? Depending on your circumstances, it might be better to hold off filing the most accurate return. The following information will help you decide when to file your taxes.
You shouldn’t need to postpone filing your taxes until the very last minute, even though many taxpayers do so on or around April 15 each year. For a number of reasons, including getting your refund sooner or lowering your risk of identity theft, filing your taxes early can make sense.
The tax filing deadline is typically April 15; however, because of the coronavirus pandemic, it has recently been extended to May and beyond.
This year, it falls on April 18, 2023, to coincide with Emancipation Day, which is observed in Washington, DC, on April 17. Check your state’s government website for accurate information, as state tax deadlines can vary.
Timing is everything in life, and filing taxes is no different. You run the risk of missing the filing deadline and being charged interest or penalties if you wait too long. Although it’s always a good idea to file your taxes by the due date, there may be other times during tax season that will allow you to save money, deter crime, or gain other benefits. Everything depends on your goal.
If your return is late by a month or part of a month, the IRS may slap you with a late-filing penalty of up to 5% of the amount owed (up to a maximum of 25%). if your tax return is received after the April filing deadline. You can request a delay, but you must also do so by the April deadline.
Don’t assume that receiving an extension means you have more time to make payments. If you require additional time to finish by the April deadline, you might owe interest in addition to a late payment penalty that typically costs 0.5% of the unpaid tax each month, up to 25%.
Four Benefits of Filing Your Taxes Early
Receiving any necessary tax refunds sooner is frequently the result of filing your tax return earlier.
By taking your time, you can also take care of any mistakes that might result in an audit.
When you plan your taxes, you have time to make last-minute charitable deductions, estimate capital gains and harvest tax losses, and move some deductible expenses to the tax year that will most benefit you. Below are the reasons why you should fill out your taxes early:
1.Faster tax refunds
Receiving a quicker tax refund is among the most popular justifications for filing taxes early. By filing your return electronically and selecting direct deposit into your bank account, you will receive your refund more quickly.
It is always preferable to file a return electronically if you want to get your refund quickly because it can take up to several weeks for paper returns.
2.To Avoid Identity Theft
The earlier you file, the less time a fraudster has to file under your name and steal your refund. This could result in various tax reporting issues, particularly if the thief files a tax return under your name while making false claims about deductions or income. It may take months to repair the harm brought on by a fraudulent tax return.
3.Collecting Financial Information
Making your tax return early can be helpful if you anticipate a significant life change, such as buying a home or returning to school. To apply for financial aid, college students use the information from Form 1040, whereas prospective homebuyers frequently need to present their completed tax returns as proof of their household income. If you expect a refund or owe money on your taxes, filing your return early will give you a head start on the paperwork required for these procedures.
4.To beat the rush of tax season.
When you file early, you have more time to comprehend any changes to the tax code and deal with any personal changes that might impact your filing status. Last-minute rush-related errors can set off audits that may result in fines and interest.
Most experts concur that you should begin your return as soon as possible. If you are receiving a refund, your decision to file early may be influenced by the complexity of your return. Make sure your return is accurate and complete by paying attention to the advice of your tax or financial advisor.