Should you file taxes early or late?
As of January 23, 2023, the Internal Revenue Service (IRS) is officially open for business and your 2022 federal tax return. You may already have filed your return or maybe you will get around to it in a couple of months. Whatever your style, consider these tips as you rush or stroll your way to Tax Day on Monday, April 18, 2023.
Benefits of filing early:
- The satisfaction of submitting taxes early is appealing to many taxpayers. As long as you are careful to check your numbers and documentation, filing early can reduce the stress of the impending tax season.
- Identify theft is an issue during any tax season. If you file earlier than later, the chances are good fraudsters will not have already submitted a tax return using your stolen Social Security number. An increase in data breaches and theft of personally identifying information (PII) means more consumers are becoming a victim of identity theft and tax refund fraud.
- Preparing your taxes on the earlier side of things covers you if taxes are owed. It is easier to come up with a plan for paying the tax with months, rather than minutes, to spare. As well, filing early gets federal taxes out of the way. If you did not prepare any needed state tax return at the same time as your federal return, you now have plenty of time to do so.
- The reason most people file their taxes earlier is to receive a refund earlier. Early filers often receive their refunds earlier as there are fewer filers in the early months of tax season.
Goes both ways:
- If you work with your usual business accountant or tax attorney, chances are good there will be ample time to get the advice you need during the early or late season. If you work with a local tax preparer, you may have difficulty getting taxes prepared if you did not make arrangements earlier.
Benefits of filing late:
- The primary benefit of filing taxes later is not the opportunity to procrastinate (although that happens a lot), but rather the ability to take your time. If you have a complex financial profile, the extra time can serve you well. Be sure to collect needed documents and statements. If you work with an accountant, be sure to provide complete information, and understand your return well enough to attest by signature on the bottom line.
- If you have offshore tax holdings, your FBAR report is due on April 15, 2023. If you are unable to meet the April 15 deadline, you can receive an automatic extension to October 15 to file.
Early or late? Most filers are somewhere in between. Accuracy counts more than speed. Better to take the extra time for a double check before you file than receive a later notice from the IRS that there is a problem with your return.
And for those hiding money under the table, or making dubious deductions? False income tax returns can lead to an IRS audit or worse. If you have a reason for concern, speak with an attorney experienced with criminal tax defense.
Concerned about a tax controversy or compliance issue? Reach out to our law firm
The tax attorneys of Robert J. Fedor Esq., LLC provide trusted guidance on tax and bankruptcy issues, offshore tax investments, and other matters to clients across the U.S. and abroad. We have offices in Cleveland and Chicago. Call us at 800.579.0997 or contact us today.
