In just a few days, we begin a new year. For many it’s a time of creating fresh New Year’s resolutions – or renewing old ones. Of course, popular goals like weight loss, debt payoff, and other life improvements are certainly worthy of consideration. But another goal you might think about is to get a start on your taxes now.
It’s true that most people don’t relish the thought of dealing with taxes until they’re forced to. But, if you’ve never thought about working on your taxes this early before, there are several reasons it’s a great idea.
1. Gives You More Time to Prepare
For the highly organized individual or couple, gathering tax information can be easy and quick. However, if you’re less than neat and orderly, you may require more time.
If that’s the case, starting on your taxes now, rather than later, is a good idea. It gives you the time you need to locate important documents. Some of these may include pay stubs, cancelled checks, invoices, receipts, and other paperwork.
2. Saves You Money
At times, those who don’t start working on their taxes early end up filing for extensions. While the IRS generally allows extensions, there can be monetary penalties attached.
In other words, you might avoid paying late filing penalties if you start on your taxes now. That will keep your hard earned money in your own wallet, where it belongs, instead of Uncle Sam’s.
3. Provides Extra Time to Prepare Your Taxes
Expanding on what I’ve already mentioned, if you start on your taxes now, you’ll have more time to complete them. Once your documents are collected, either you, or your tax professional ,can begin working on your taxes immediately. As soon as the tax season opens, or within a few days, you’ll be ready to file your tax return.
Alternatively, waiting until the deadline to start on your taxes could cost you extra money. You may have to pay someone extra to rush the completion of your return.
4. Allows You Time to Check for Errors
Are you planning to prepare your own tax return this year? Tax errors can trigger a tax audit if you don’t fill out the tax forms correctly. In addition, you could end up paying both penalties and interest.
On the other hand, when you start on your taxes early, you have time to double check everything before filing. If you find errors, you can correct them and maybe even save yourself some money.
5. Lets You Take Full Advantage of Deductions
If you plan on claiming tax deductions or itemizing your return, beginning early is a good idea. The extra time can help you find and claim all of the deductions to which you are entitled. The end result will be filing a tax return that helps you keep your tax obligation at its lowest.
6. Gets Your Refund Back Faster
Obviously not everyone receives a tax refund each year. In fact, some people end up paying more taxes to the government instead.
However, when you’re expecting a refund, it sometimes feels like the money can’t get there quick enough. For those instances, keep in mind that the sooner you file, the sooner you’ll get your refund.
Putting it another way, you know you’re required to file every year, so why put it off? If you start on your taxes now, and file sooner, you’ll get your tax refund back faster.
The Bottom Line
Let’s face it: Taxes can’t be avoided forever. That being the case, it makes no sense to put off doing your taxes. What’s more, as you can clearly see, there are lots of reasons to start on your taxes now.
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Have you put off starting on your tax returns in the past? What will you do this year?
Great advice. I’ve promised myself to get a jump start on tax prep this year. Even though I go to an accountant, I always put it off to the last minute and that’s just not practical when you reach a certain level of volume in your business.
That’s a good point! The higher the volume, the better it is to start early. Something I should have pointed out, but I’m glad you did!
Great advice. I’ve promised myself to get a jump start on tax prep this year.