As tax season begins, you could be wanting to file your tax return for a faster refund and to envision the annual task off your list.
For many filers, the tax deadline is April 18, and the IRS urges Americans to arrange before filing to avoid processing and refund delays, together with future IRS notices.
“You don’t need to race to the finish line with this,” said certified financial planner John Loyd, owner at The Wealth Planner in Fort Value, Texas.
Lloyd, who can also be an enrolled agent, prefers a mid-March filing date. Here’s why.
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Why it’s smart to ‘tap the brakes’ and file in March
While you could desire a speedier refund, experts say it is important to have all of your tax forms before filing your return. Corporations send a replica of those forms to you and the IRS every yr, making it easy for the agency to flag returns with missing information.
Typically, skipping these details triggers an automatic notice from the IRS, which can delay processing or take time to resolve, he said.
Most tax forms arrive by late January to mid-February, but others could also be later.
That is why Loyd targets a mid-March filing date, to be sure that clients have all of the essential forms — including documents which will need corrections. For instance, if someone discovers an error on their W-2 from work, it could take time to repair the error and reissue the shape.
“For many of my clients, I’m really urging them to tap the brakes,” he added. After all, you may still want to provide yourself loads of time to fulfill the April 18 deadline to avoid a late-filing penalty.
Avoid tax identity theft by ‘filing ahead of fraudsters’
That said, there is no reason to attend once you will have all of your essential forms. One reason to file promptly at that time is the danger of tax-related identity theft, said Eric Bronnenkant, a CFP and licensed public accountant at Betterment, a digital investment advisor.
Tax-related identity theft happens when someone uses your Social Security number to file a return and claim a fraudulent refund. You could discover through a rejected tax return or IRS letter, amongst other warning signs, based on the IRS.
“Filing ahead of fraudsters is a great idea,” Bronnenkant said. But one approach to protect yourself is by signing up for an identity protection PIN, or IP PIN, he said, which is a six-digit password to file your return.
The downside is you’ll have to maintain track of a unique IP PIN every yr, which the IRS sends by mail or you may retrieve online.