What to Know About the Benefits and Procedure of Filing Your Taxes Early
- Author: Chris Remington
- Posted: 2024-08-23
When it comes to your personal finances, there is no need to put off until tomorrow what can be done today. Millions of Americans have already got started on filing their tax returns. The Internal Revenue Service (IRS) encourages Americans to file as early as possible with many people choosing to go that route if they are counting on a refund.
Getting started early will also allow you more time to double check for mistakes and plan for any potential payments that you may owe. Many people make the mistake of putting off filing because they owe money. However, the IRS allows you to file now and make any payments later.
Here is what you need to know about filing early.
Benefits of Filing Early
There are a number of reasons to get your taxes down now rather than later. By giving yourself more time, you are less likely to make mistakes. This could potentially result in a bigger refund and more money in your pocket. You are more likely to make mistakes if you are rushing through the process the day before it is due.
Filing early will also give you more time to check around to see if there are any potential deductions that you can add, providing an even larger return. You will also likely enjoy less competition for tax appointments if you get ahead of the crowd.
If you end up owing money, you will be able to plan how to make the payments if you give yourself additional time before the money is due. Lastly, there is less of a chance of tax fraud if you are not scurrying to get it done up against the deadline.
When to File
The IRS is already accepting tax returns. The deadline to file during the regular period this year is Tuesday, April 18. While Tax Day is traditionally April 15, this deadline was extended because the 15th falls on a weekend in 2023.
By now, you should have received most of the documents needed to file your taxes. Employers are required to send out all W-2 forms no later than January 31. This deadline also applies to non-investment 1099 forms, including information about disbursements from retirement accounts and other types of nonwage sources of income.
The forms that often lag behind are usually the 1099 forms used from investment accounts. You also may be waiting for any pass-through entities.
What You Need to File Early
There are several forms that you will need in order to file your taxes. This complexity depends on your personal tax situation and the number of income streams that you have. In short, you will need all W-2 forms from any job that you earned a wage, 1099 forms from retirement or brokerage accounts, 1099 forms for any type of independent contract work, mortgage and property tax statements, any charitable donation receipts, eligible business expense receipts, and a K-1 for any partnership income.
The more organized that you are during the year keeping all of this paperwork together, the faster that you will be able to gather all of the relevant documents. Do not hesitate to consult the help of a professional if you have any questions. When it comes to the IRS, it is better to be safe than sorry.
Reasons to Not File Early
While most Americans will see benefits from filing early, the IRS advised those who received either a rebate payment or stimulus check from their state to wait to determine if this money will be taxable. The taxability of some of this money has been called into question recently, prompting the IRS to say that it is still working out the details with tax officials in various states to determine how these payments should be classified on federal tax returns.
There are a lot of decisions to be made when trying to maximize the tax law to your advantage. Getting a head start on the process will go a long way in ensuring that you have the time and the resources to make the best decisions for your personal finance situation.
