When Is the Best Time to File Taxes?
Like most people, you may wonder when is the best time to file taxes. The answer depends on your situation. Read on as we talk through some factors that can affect when you should file your taxes. We will also provide some tips about when is a good time to file taxes and why having the assistance of tax specialists like the ones at taxesforexpats.com is necessary to help make the undertaking as seamless and stress-free as possible!
Reasons to File Taxes Early
Regarding taxes, it's always prudent to file taxes early rather than late, lest you want to incur penalties. Why should you file your taxes early? Here are several crucial reasons:
1. Faster Tax Refunds
Plain and simple: the sooner you file your taxes, the sooner you will get your tax refund. The IRS typically hands refunds within 21 days of receiving a return. If you wait until closer to the April 15th filing deadline, you may have to wait much longer for your refund. That's because the IRS is processing millions of returns during that period, and it can take several weeks to get through them all.
If you're hinging on your tax refund to perhaps pay off debts or cover other expenses, filing as early as possible is best to get your money sooner. Filing your return through digital means with direct deposit into your bank account is the fastest way to get a rebate.
2. More Time To Pay Taxes
While the IRS offers a six-month extension to file your return, you will still need to pay your tax bill by April 15th or face penalties and interest charges. You can also arrange automatic withdrawals from your bank account to make payments on your tax bill.
The earlier you prepare your tax return and find out how much you owe, the more time you'll have to save up the money or make other arrangements to pay your tax bill. If you are anticipating a refund, remember that you will not get your hands on that check until you file your taxes.
3. Obtaining Financial Information
If you are preparing to make big moves like buying a house or going back to college, putting together your tax return as early as possible can give you a better idea of your financial situation. For example, if you're a college student, you can apply for financial aid earlier if you have your tax information ready. And, if you're buying a house, you'll need to provide your lender with a copy of your tax return to prove your income. If you wait until closer to the filing deadline, you may not have enough time to get all the financial information you need to make these significant decisions.
4. Avoiding a Tax Extension
Most times, extensions result from disorganization and not having all the necessary paperwork rather than a lack of finances. If you're in this predicament, it may be best to seek professional help rather than wait until the last minute and risk making a mistake on your return. Filing for an extension gives you more time to get your affairs in order. But it's critical to remember that this doesn't give you any more time to pay any taxes you may owe.
5. Preventing Tax Return Identity Theft
Identity thieves have been known to file fraudulent tax returns using stolen Social Security numbers to receive refunds. By filing your return early, you can prevent someone from filing a return in your name and getting your refund. The IRS has increased its efforts to combat tax-related identity theft. However, it's still important to be proactive in protecting your information. When you file early, you can be sure that the return with your name on it is the only one being processed.
6. Peace of Mind
The most critical reason to file your taxes as early as possible is to give you peace of mind. Once your return is filed, you can stop worrying about it and focus on other things. Filing early also means you won't have to rush through the process and make mistakes that could cost you money or delay your refund.
Regardless of what your reason is for wanting to file early, there are plenty of good reasons to do so. And, with today's technology, it's easier than ever to get your taxes done before. So, take advantage of the benefits of filing early and get your return in as soon as possible. You'll be glad you did!
Reasons To Wait to File Your Return
Even though there are many good reasons to file your taxes early, there may be some instances where it makes more sense to wait until closer to the deadline or even ask for an extension. So, if you're asking "why should I wait to file taxes?" or "can I wait to file my taxes?" here are some answers:
1. Yet to Receive Your Documents
If you're waiting for some pertinent documents, it may be best to wait until you have all the necessary information before filing your return. It's always prudent to have all the correct paperwork and information before filing your taxes to avoid mistakes.
2. Complex Tax Returns
If your tax return is more intricate than a standard form, it may be best to wait until you have all the information and can consult with a professional to ensure everything is filed correctly. This way, you can make any adjustments that may be necessary and avoid any penalties.
3. Owe Taxes
If you know that you're going to owe taxes, it may be better to wait until closer to the deadline, so you have more time to save up the money you'll need to pay. However, bear in mind that if you wait too long, you may face late payment penalties and interest charges. So, it's crucial to balance the need to save with the risk of owing more money in the long run. No matter what your reason for waiting is, it's important to make sure you don't procrastinate too much and end up owing penalties.
The Bottom Line
When it comes to filing taxes, there is no one-size-fits-all answer. The best time to file your taxes is reliant on your circumstances. However, if you're looking for some guidance, the tips above can help you determine when the best time to file your taxes may be.
So, when should I start filing taxes? Generally speaking, the best time to file taxes is as soon as you have all the necessary information and documents. However, there may be some conditions where it makes more sense to wait until closer to the deadline. Ultimately, it's important to do what's best for your situation. If you have any queries or worries, it's always a good idea to consult with a tax professional.
For that, you can contact Taxes for Expats. We have a team of highly qualified tax professionals who can help you with your tax situation. Contact us today for a free consultation.