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Why It’s Important To Prepare Your Taxes Earlier Rather Than Later

Posted on 20, Jan, 2014

The April tax return deadline isn't all that far away, and although you might not want to think about it you're certainly going to have to sooner rather than later. There's no good reason for putting off filing your tax returns other than it just seems like too much like hard work for you right now, a decision you'll usually come to regret later on.

Now it's hard enough getting people to file their return on the due date but why on Earth would you want to prepare your tax return far earlier than it's actually due? Well, there are lots of reasons for filing earlier, which we're going to address here:

Earlier Refunds

If you file your return earlier than the due date this means that you're avoiding the last minute rush of millions of other returns being filed at the same time as yours. This basically means that the IRS staff has far more time to process your return as quickly as possible, which in turn means that if you're due a refund you get that a lot earlier too. Would you turn up for your flight 10-minutes before it leaves, or 2-hours before it leaves? The same principle applies to filing your IRS returns each year - turn up early!

Avoiding Mistakes

Even the most experienced CPA or self-preparer can make a mistake on a return if they're under huge amounts of time pressure to get the return ready by the deadline. This means that because you left everything until the last minute there's a very good chance you'll wind up paying too little tax, or too much. Planning to file your return early means you have far more time to prepare everything and report your income properly, so the sooner you start planning your tax return the better.

Avoid Penalties

If you're not planning your return well in advance there's every chance you're going to miss the deadline which will then leave you paying a variety of different penalties including late payment, late filing and then any interest due while your return is delayed. Obviously filing early means you can avoid requesting an extension, which can also result in your incurring all types of charges and penalties on any tax balance due to the IRS for the current year, or any other year you owe taxes from.

With the advent of E-filing there's really no reason for anyone to file their tax return past the due date except that they simply didn't bother preparing their return in time in the first place. For those of you planning to file early, E-filing will speed up the processing of your return because there are no paper copies of documents to be mailed, lost, returned, mailed again and then manually processed by several people at the IRS. E-filing your return makes the entire process easier on everyone involved, plus most E-filers have their tax refunds issued within 30-days of their return being sent in.

Talking to a CPA earlier in the return process can also help you save on your taxes by making the most of your deductions. Leaving it until the very last minute means they can't provide as much assistance, which is a shame because there are certain major deductions you could make before the end of a year which could help reduce your tax liability by a significant margin.

Filing your tax return early also teaches you how to manage your finances properly, and allows you extra time to deal with any unexpected hiccups in your filing.


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