It is generally accepted that when you file taxes the process can be stressful. It can also be a lot of hard work, regardless of whether your personal financial situation is good or bad. For many people, seeing just how much you owe the IRS can be disheartening.
In an effort to delay the unpleasantness, many people forgo filing their taxes until the deadline draws near. But waiting to file isn’t always a good idea. If you’re wondering why you shouldn’t wait to file your taxes or if there are circumstances where delaying is the right move, here’s what you need to know.
The Government Owes You a Refund
If you have a refund coming, you should file as soon as possible. Why? So you can put that money to good use!
When you don’t request your refund in a timely manner, you’re missing out on the interest that money could generate during the months it otherwise would sit in the hands of the IRS. Or, if you have debt to pay off, you are paying more interest on those debts than you would if you applied your refund now.
Letting the money sit rarely does you any good. So, if you are owed a refund, file as soon as you can.
You Owe Money
While it may seem counter intuitive to rush to file when you owe money, it actually isn’t. First, you’ll know precisely what you owe, ensuring you can gather the appropriate funds. Second, even if you file, you have until the filing deadline to send the payment. This means you don’t have to rush to find the money if it isn’t available when you file early.
Possible Identity Fraud
Did you know that tax identity fraud is one of the fastest-growing forms of identity theft? It’s true.
When this happens, scammers file tax returns using another person’s information, like their name and social security number. Then, after the file, they pocket the refund and leave the individual with scores of problems.
By filing as soon as possible, you lessen the likelihood that a scammer will use your information before you do. That means your refund will end up in your hands, not theirs.
You’re Missing Information
One situation where you should wait is if you don’t have all of the information you need to file taxes. While standard tax documents (like W-2s and 1099s) should already be in hand, that doesn’t mean you aren’t waiting for one that got lost in the mail. Similarly, those with business expenses may need more time to gather their receipts and other paperwork.
If you still don’t have all of your documentation when you file taxes, then you need to wait to file. Otherwise, you’ll have to amend the return later, which can increase your odds of being audited. An amendment can also result in interest charges if it turns out you owe more than you already paid.
Typically, filing your taxes as soon as possible is always a smart move. So, make sure to gather your documents as quickly as possible and get your taxes completed as fast as you can.
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Tamila McDonald has worked as a Financial Advisor for the military for past 13 years. She has taught Personal Financial classes on every subject from credit, to life insurance, as well as all other aspects of financial management. Mrs. McDonald is an AFCPE Accredited Financial Counselor and has helped her clients to meet their short-term and long-term financial goals.
