Welcome to the time of year when millions of consumers all over the country start drooling about the tax return that they’re going to receive from the IRS. Many consumers want that tax refund as quickly as possible, for obvious reasons, and the fact is that financial experts have been telling consumers for years that filing early is a good idea adds to the rush.
While that might be true if you’re completely ready, if you’re not you might actually hurt yourself as far as your return is concerned because, if you file incorrectly, you’ll get less money, need to file an amended return and possibly increase your chances of getting audited. Below are several good reasons that filing your tax return early is not a good idea. Enjoy.
Reason #1: All of your forms might not have reached you yet. Even though the deadline for 1099 forms is February 2 this year, it’s a fact that many issuers still miss that delivery date. K-1 forms for partnerships, LLCs and S corporations can also come later than their due date of March 15th. Unless you have all the information from all of these forms, your return won’t be complete.
Reason #2: Filing quickly usually leads to mistakes. There’s an old saying carpenters use; measure twice, cut once. What that means is simply that you should take as much time as possible to make sure everything is perfectly correct before sending in your return, so that you don’t have to amend it later or pay any penalties for mistakes.
Reason #3: If you end up amending your tax return, you have to make sure that you fix everything, not just the mistakes that increase your refund check. That’s one of the reasons for Reason #5 (below).
Reason #4: Amendments to your return can be lengthy, tricky and stressful. Even if you realize that you’ve made a mistake, one that could get you back a slightly higher amount of money, you probably should think twice before making an amendment because it can set you up for an audit in the future.
Reason #5: Referring to Reason #4, the fact that you can increase your chances of being audited if you have to amend your tax return is the best reason to make sure that you file correctly the first time.
Reason #6: You’ll have to pay interest and penalties if you owe more taxes. If the IRS finds that your return is incorrect, they’ll usually send you a bill and compute any interest that you owe them on the money you didn’t pay.
Tax time is stressful enough without increasing your stress by incorrectly filing your tax return. As we said, if you are completely ready and feel extremely confident that you filled out everything correctly, said that as early as you want. On the other hand, measuring twice and cutting once works for both carpenters and taxpayers.