Per usual, there is nothing normal about this upcoming tax season. Between the uncertainty in the economy and tons of changes to different tax credits and deductions, Americans are going to be having another odd tax season.
And for most Americans, it makes sense to file your taxes as early as possible - especially if you're expecting a tax refund. There's no reason why you should let the government keep your hard earned money longer than you have to.
Here’s our best tops and tricks to help you file your taxes early, avoid the rush, and get the best tax refund you can.
The first step in being able to file your taxes early is simple - you need to get organized. By having all your tax documents in one place, you can make sure you have everything you need for tax season. I’m a big fan of using a tax binder. This means keeping a binder all year for your tax documents - because you can be getting stuff all year long! Check out my tax binder here for ideas.If you want to beat the rush, it’s all about having your documents organized and in one place. That way you can know what you have, and what you’re waiting on.
There are several reasons why you should file as early as possible!The first, of course, is the faster you file your taxes, the sooner you get your tax refund! Given that it takes the IRS, on average, 21 days to process a tax refund, everyday you delay in filing a return, is another day you delay getting your refund.
When To Expect My Tax RefundSecond, and a bit scarier, is the potential for identity theft. While identity theft of tax returns (and tax refunds) has been declining, over several hundred thousand people each year become victims. Furthermore, to prevent identity theft, the IRS flags about a million returns or more each year for additional information.
What happens is someone else files a tax return with your name and social security number, and as a result, they get a refund that should have gone to you.It’s possible to sort this out and file your return correctly - but it can add up to 9 weeks or more to the process of getting your tax refund. That’s a long time!This can be avoided by filing early. If you file your return first, and someone comes along later to file, they’ll be blocked and forced to provide proof (which they won’t be able to). So, if you can file early, you can lower the risk of identity theft.Finally, if you do need professional help, it’s always easier to get it earlier than later. For example, if you wanted to get a professional to help you with your taxes, you might have a long wait as it gets closer to the tax deadline.
Related: Why Your Early Tax Return Will Be Delayed
It doesn't always make sense to file early - and in some cases, you should wait.
The main reason to wait to file your taxes is because you don't have all your paperwork yet.
While many tax filers receive most of their paperwork in January, the IRS sets different deadlines for different tax forms. For example, the W2 needs to be sent out by January 31, but 1099-B for investing doesn't have to be sent out until February 15.
Then you have special forms like a K-1, which doesn't go out until the business tax return is filed (which can be March or even extended until September).
And for 2023, a lot more tax filers are going to be receiving 1099-K, which don't have to be sent out until January 31. If you received over $600 through services like PayPal or Venmo, you might be receiving this form.
While you don't technically have to wait for late tax forms to file your return, you do have to ensure your tax return is accurate when you file. And not reporting certain paperwork (or guessing on the numbers) can lead to errors, which can lead to IRS audits, more in taxes, and potentially penalties.
Related: What To Do If You're Waiting On Late Tax Forms
Filing online is the easiest way to go to beat the rush and get your tax refund quickly. Why? Because you can do it at home, on your time, with no hassle.So, if you’re looking to beat the rush, there is no better way than from the comfort of your home computer.And if you’ve never done it before - it’s easy! All you do is follow the on screen questions and enter your information accurately. Even if you’ve never filed your own tax return before, it’s possible to do online!
However, not all tax software is ready if you are filing early. In fact, some tax software doesn't even go live until mid-January.
If you're looking to file early, check out our list of the Best Tax Software for Early Tax Filers. These are programs that are live and ready to go in December.
Filing your taxes early is a smart move. You get your refund faster. You lower the risk of identity theft. And, if you need professional assistance, you won't wait as long for help.
However, don't file early if you're waiting on paperwork. It can lead to costly mistakes!
Editor: Claire Tak
The post How To File Your Taxes Early (And Should You) appeared first on The College Investor.
By: Robert FarringtonTitle: How To File Your Taxes Early (And Should You)Sourced From: thecollegeinvestor.com/23785/file-your-taxes-early/Published Date: Mon, 19 Dec 2022 08:15:00 +0000