Most Americans receive tax refunds every year, yet tax season is still a time of dread. Many filers wait until the last minute. There’s nothing inherently wrong with this strategy, but there are also benefits to being proactive.
Let’s talk about the pros and cons of early tax filing.
When You Can File 2023 Taxes
The IRS deadline for filing your 2023 federal taxes is Monday, April 15, 2024. You can prepare your documentation as soon as you’re ready, but the IRS won’t start processing returns until January 18, 2024.
Pros of Filing Early
1. Quick Access to Your Refund
Remember the tax refund we just mentioned? The earlier you file, the earlier you’ll receive your refund. The money can provide a welcome financial boost if you need to pay off bills or are in the mood to splurge.
2. Lower Risk of Identity Theft
With the rise of online tax filing, identity theft is booming. By filing your return before potential scammers do, you reduce the chance of someone fraudulently claiming your refund. The IRS will reject the second filing.
3. Easier Scheduling
Are you planning to work with a professional like one of the CPAs at Kondler & Associates, CPAs? They get busier as tax season progresses, making it harder to book an appointment. Even worse, some accountants charge more as the filing deadline approaches. You can avoid these problems by getting your taxes done early.
4. Peace of Mind
No one likes doing their taxes, but it’s especially stressful when you’re rushing to meet a deadline. Filing early gives you peace of mind. While everyone else scrambles to file their returns, you can relax and focus on other things.
5. Time to plan for payments
It makes sense to want to receive your tax refund earlier. The benefits of seeing your tax bill early, however, are less obvious. One reason is that the bill won’t be a surprise and you have time to plan. The bill is due on the filing date, even if you file early.
Cons of Filing Early
1. Waiting for Necessary Documents
You don’t have as much time to receive important tax documents when you file early. This can be a big problem, especially if you have multiple income sources or a complex financial situation. You may end up having to file an amended return.
2. Risk of Rushing
It’s essential to keep your tax return as accurate as possible. Filing early doesn’t mean speeding through your return at the expense of accuracy. If you make a mistake, the IRS may decide to audit you. Working with a tax professional, however, dramatically reduces this risk.
The Middle Ground
Filing your taxes early has its perks, but it’s not the best strategy for everyone. Instead of trying to beat the deadline by filing as soon as possible, consider a balanced approach:
- Prepare Early: Start organizing your tax documents well in advance to be ready for filing as soon as you have everything you need.
- Stay Informed: Monitor tax law changes and consult a tax professional to maximize your deductions and credits.
- File When You’re Ready: Don’t rush to file if you’re missing essential documents or unsure about your return. Taking your time can prevent costly mistakes.
Whether to file your taxes early or not depends on your circumstances. Consider the pros and cons mentioned above, and remember that the key is to make a well-informed decision that suits your financial situation and peace of mind. Whether you’re an early bird or a last-minute filer, the goal is the same: to ensure your tax return is accurate and complete.
Kondler & Associates, CPAs, can help you with your tax filing needs. Contact us today to learn more about our services and how we can make the process easier.