Timing is everything in life, and tax returns are no exception. By waiting too long, you could miss the deadline, resulting in interest and penalties.
You should always file your taxes by the due date, but you could save money, avoid tax crime or gain other benefits by filing significantly before the tax deadline. Your goals will determine when you file your taxes.
The Best Time to File Taxes Cheaply
Traditionally, the best time to file your taxes cheaply is before March 15.
As a result of competition in the tax software market, prices fluctuate throughout the year. There is a trend for prices to rise in the 30 days before the typical April deadline, not just for federal returns. Filing fees for state returns may also increase during peak demand.
To save a lot of money, if you are going to hire a human tax preparer, you should get on their calendar as early as possible. Once they become busier later in tax season, you are likely to see a steep increase in prices.
The Best Time to File to Get Your Tax Refund Quickly
If you want your refund quickly, any time you file is technically okay - but be sure to submit your return electronically.
Don't send a paper return if you need a refund right away. The refund process for old-fashioned paper returns can take six to eight weeks. Filing your return electronically ("e-filing") lets the IRS get going on your refund as soon as possible. Most refunds are issued within 21 days.
Waiting for the postal service to deliver your refund check is unnecessary, too. You can have your refund sent to your bank account right away by choosing direct deposit when you file your return.
Helpful Resource: Where is my tax return? How long does it take to get your refund.
When should you file your taxes early?
Americans are beginning to think about filing their taxes. You should always file before the deadline passes, or request an extension if needed, but the best time may depend on your particular circumstances.
Here are some reasons why you may want to file as soon as possible when you receive your end-of-year paperwork.
If You Think You Will Get a Refund
When you have all your paperwork and think you will get a refund, there is no better time than now to file. Tax returns are generally accepted by the Internal Revenue Service (IRS) in mid-to-late January.
It is advisable for early filers to use an online service or to hire a tax accountant to handle their tax filing electronically. Electronic filing allows for faster processing and a quicker refund.
The processing of electronic returns typically takes 21 days, whereas paper returns are typically processed in six to eight weeks. By choosing direct deposit over a paper check, taxpayers can reduce the processing time even further. Taxpayers can check their refund status on the IRS website.
If You Have a Simple Return
Simple tax returns can be filed with the new simplified 1040 Form. When schedules are not included in this form, preparing it is easier. There may not be much reason to procrastinate once you have received all of your documentation and confirmed the accuracy of the information. Waiting to file should not change the outcome of your return.
If you are receiving a refund, you can claim your refund more quickly this way. You will know how much tax you have to pay, if no refund is anticipated. Don't forget that filing your taxes early doesn't mean you have to pay your bill before the April deadline. Getting a warning will help you budget for the tax bill and may enable you to pay it in time.
When should you wait to file your taxes?
Remember, if you have a simple tax situation, filing early might get you a refund sooner.
However, if you receive a revised 1099 Form after you filed your taxes and the change was significant, you may need to amend your tax return. It is also possible that you will have to wait until at least mid-March to file if you own an ownership stake in a partnership or other pass-through entity.
Here are some common situations in which it may be better to wait to file your taxes.
If You Have Not Received Your Documents
In many cases, a taxpayer puts off preparing their tax return because he is missing some of his documentation or because the documentation he has received is inaccurate.
In most cases, the paperwork you receive will be accurate, but sometimes employers, mortgagees, investment companies, and universities will report your wages, mortgage interest, investment income, and tuition costs incorrectly.
You must file an amendment if you receive new paperwork after submitting your tax return. You should always wait until you have all of your paperwork and it appears correct before filing your taxes.
If You Have a Complex Tax Situation
American taxpayers who have more complex tax matters may benefit from time to consider their responses, compared to people with simple tax returns. When this is the case, you may want to start your tax return early, but spend some extra time considering your responses and reviewing your return.
By giving yourself time to think about your return, you can make adjustments if necessary. In the event you file early but later discover you made a mistake, you'll need to amend your tax return. The process may take longer, resulting in a delayed refund. Preparing your return correctly the first time is the best course of action.
Helpful Resource: How to Amend Your Tax Return
When is the last day you can file your taxes?
Your taxes must be filed by April 15 or the following business day if it falls on a weekend.
To do that, you must either electronically file your taxes, have your tax preparer submit them, or mail them by the due date. Those seeking an extension in 2022 have until October 17 to file.
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