The Internal Revenue Service will start accepting 2019 tax year returns next Monday, Jan. 27.
A lot of folks already have filled out their 1040s and put them in the queue for IRS processing next week. Good for them. Their annual tax task is done.
But there also are some reasons why you might not want to be among the tax season's first filers. Here are six.
1. To make sure you have all your tax statements.
If the only data you need to file is from your job's Form W-2, then you probably can (and should) file as soon as you can. But wait for that W-2. Using your year-end paycheck stub may not accurately reflect annual earnings or the amount of other taxable compensation or the taxes you had withheld. Using that sketchy information could mean your tax return would be wrong.
Plus, a lot of folks get a lot more tax statements than just a W-2. These documents not only have data necessary to properly fill out a tax return, but they also are copied to the IRS.
Most these documents are supposed to at least be in the mail (snail or electronic) to you by Jan. 31. Some issuers are on the ball, getting the data out early in the new year. Others, however, are slow. Or your U.S. Postal Service branch or carrier has issues. Or the document went into your junk/spam box and you didn't check before you deleted everything.
Give those third-party form issuers some time. If you haven't gotten them by the middle of February, then contact them and ask for it to be reissued. And you definitely need that correct, official info because, as noted earlier, the IRS gets a copy of these statements. Agency workers will flag your return if it doesn't match the information that the IRS got via the statements but that you didn't report.
Patience also is required if you get any of the tax documents that aren't on the Jan. 31 delivery schedule. In fact, these usually aren't issued until well into the filing season or even beyond.
This is the case with K-1 forms issued for partnerships, LLCs and S corporations, which don't have to be sent until March 15. If you need a K-1 to file, there's no way to do so until you get it.
Filing without the correct information means delayed processing, slowed refunds, an amended return filing and dealing with the IRS much more than you ever wanted.
2. To make sure you have all other tax information.
Formal tax statements you need to file your taxes are issued in many cases, but not all. For example, 1099-MISC forms for contract work you did as full-time job or to supplement your regular salaried work don't have to be issued if your total pay was less than $600.
You being an honest taxpayer, however, still need to report that $599 your neighbors paid you for taking those great photos of their son's first birthday party. Check your records to make sure you report all of this type of income.
Also make double check that you have all the details on potential tax breaks, such as medical expenses if you're still itemizing and claiming these costs. Or the expenses you paid for the care of your young children so you could work. You need these amounts — as well as the caregiver's tax identification number — to claim the child and dependent care credit.
Again, if you find such income or expenses after you file, well, you know the drill.
3. To sort through your filing's complexities.
If you're one of the taxpayers who gets lots of tax statements, that's an indication your return is more complex. And the more complicated your taxes are, the greater the chances that you'll screw them up if you're in a hurry to file.
If you have more involved taxes — multiple jobs (either full-time or gigs on the side to supplement your main work's wages) or your own business or investments or a big, messy family — you need time to sort through all the related tax implications. In these cases, it's a good idea to start your return early, but then take your time contemplating your tax and filing choices and carefully reviewing the return before sending it to the IRS.
There's another complexity factor that’s beyond your control: the tax laws.
Although we made it through last year, the first filing season under the many Tax Cuts and Jobs Act (TCJA) changes, some things still are in flux. There's still plenty of confusion about the 20 percent tax deduction for some small businesses. Even tax forms are still being tweaked. The new individual Form 1040 and associated schedules, for example, have a different look this year. If you use tax software, it should help you deal with these changes, but these new issues still could complicate your filing.
4. To allow you to find a tax professional.
You've taken a close look at your big, convoluted tax life and have decided it's time to turn it over to a professional. Good idea, but not one to be taken lightly or quickly.
You'll need to spend time to determine the type of tax pro that best fits your needs. Then you must thoroughly check out potential tax preparer candidates. That takes time to do correctly, but in the long run, it's well worth it.
5. To ensure you understand your return.
I know, most of us just want the filing over with ASAP. I get it.
The hubby and I have been married for a long time, during which I've always done our taxes. And every year when I tell him what I've done as far as our 1040, he wants to brush it off with a "I trust you." I'm glad he does, but I still insist he at least fake listening to my explanations.
It's important that he know what's on the return because when all of us taxpayers sign our 1040s, either with a real John Hancock or an electronic signature, we all are attesting to the return's accuracy.
That's true even if you paid a tax preparer to do the job. The ultimate legal responsibility is yours. And if like the hubby and I you file a joint return, the responsibility is on both of you, even when one spouse did the actual filling out of the forms.
So if you have questions about why a deduction was or wasn't claimed or how come your tax bill was bigger this year than last, ask. Ask your tax software's help option if that's how you're doing your taxes. Ask your tax preparing spouse. Ask your tax professional. And ask until it's totally clear.
6. To get your return right.
All the previous tax procrastination situations lead up to this one. Once is enough when it comes to filing. If you're too eager to file your taxes, you might have to do them again because in your rush you didn't include necessary information or made a mistake.
A mistake on a return, such as overlooking some income or a deduction, means you'll need to correct it by filing previously mentioned and usually dreaded amended return (Form 1040X) as soon as you discover it.
Things can get even stickier when it's the IRS that finds your filing faux pas. And you can bet the tax agency will, eventually. In fact, if you make a 1040 mistake, you want the IRS to find it quickly. The longer the tax error sits there, the more tax penalties and interest on what you owe adds up.
But by letting your original return sit there just a bit before you file it, you provide yourself time to take another look. Such review can be valuable.
I've been a professional writer my whole adult (and a bit before) life. Much of that time, I've been writing about taxes. Over the years, I've discovered that writing and filing taxes have something in common. Often, as soon as you're done, you see something you want to change.
It's not too difficult to change an article or blog post. Just call your editor or open your blog publishing tool and make the revision. It's not so easy with taxes (that darn amended return again).
So after you do your return, be it the first week of filing season or closer to April 15, take a break. Step back and go on about the rest of your life. Then come back to your return and look it over. Fresh eyes often make a mistake suddenly seem amazing obvious. Since you haven't sent in your 1040 yet, you can correct it.
Don't miss the April due date: The above six reasons discuss why you shouldn't be in a big tax filing hurry.
However, they in no way advocate that you miss the April filing deadline.
Take as much time as you need to file your taxes completely and accurately. Just do it by the due date. Get your return — or at least an extension — filed by then.
More importantly, pay any taxes due, by the April deadline.
If you don't and then file a return late, that's a whole other set of problems … and another tax blog post!
You also might find these items of interest:
- 6 reasons to file your taxes early
- IRS Free File now open for the 2020 tax season
- 10 reasons to file a tax return even if you don't have to
Advertisements
Via RSSMix.com Mix ID 8246157 http://www.rssmix.com/
Comments
Post a Comment