Many people have the problem of procrastinating and putting things off until the very last minute. Although this may work out for some things, it commonly leads to more problems in the future, especially when it comes to financial issues. This also holds true for tax season when many people end up procrastinating on filing their taxes on time. In order to avoid problems, you should consider filing your tax returns earlier than the deadline which is usually around April 15 each year.
Collecting necessary information
Regardless of whether or not you actually file your tax return early, it is best to at least begin collecting the information and documents you need to complete your tax returns as soon as possible. In this way you can avoid scrambling around at the last minute to gather items such as tax documents from your employer or receipts for deductions.
Receive your refund sooner
Those who look forward to their yearly refund from the Internal Revenue Service (IRS) should know you can have your refund sent to you sooner if you file your tax returns early.
Avoid identity theft
When you file early there is less time for a criminal to use your identity fraudulently and take your refund. This can cause all types of problems which could take many months to resolve.
Avoid making mistakes
Filing tax returns at the last minute can result in you rushing to gather what you need to complete the required tax forms. This can increase the chances of you making a mistake on your forms. In some cases, this may result in you being audited by the IRS due to inconsistencies or false information on your return. You may end up paying penalties and fees that could have been avoided if you were not in such a rush to make the deadline.
Avoid amended returns
When you make mistakes on your tax return, and you notice them after you have already filed your return you will need to file an amended return to correct these errors. Unfortunately, filing amended returns does tend to increase the chances of being audited by the IRS.
Improved tax planning
If you start preparing for tax season ahead of time before it actually even starts you will be able to make strategic decisions whether or not to shift some tax burdens to whatever year you think is best for you. This could mean paying your property taxes, mortgage payments or business expenses at a different time than you normally would do if you were unaware of your tax liability situation.
Develop an effective tax plan
Besides filing your tax returns in a timely manner, you should also develop a comprehensive tax plan as soon as possible. This can help you take smart actions throughout the year and may
result in a lower tax bill. There could be many deductions you did not realize you could take which is basically leaving money on the table.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Neither Raymond James or its advisors provide tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Prior to making an investment decision, please consult with your financial advisor about your individual situation.