Why File Your Income Taxes Early? And, Why File Electronically?
BY DI IORIO & DI IORIO ACCOUNTING FIRM
Once you have received all of your tax documents it is a good idea to file your return, rather than wait until you get closer to April 15th or an extended date. It is essential that you know that you have all of your tax documents and that they are correct. Di Iorio & Di Iorio can help you to make this determination. Our tax professionals will help you to be assured that you are paying the lowest and correct amount of tax allowable, and filing within the most appropriate time-frame without errors and with the minimal amount of risk that you will be selected for audit.
First, have your tax returns prepared by a professional; preferably a CPA. Next, review your return carefully including a two-year comparison with last year. Finally, file it promptly. The principle reasons to file electronically and promptly are:
- You will get your refund faster. If you e-file and authorize direct deposit, you will get your refund in about 18 days. Why let the government have your money that you can put to good use at your own direction?
- Our tax professionals use tax software that provides reviews and audit alerts so that your tax return is virtually audit-proof. You receive an electronic acknowledgment from the taxing authorities that your e-filed return was received by them.
- You will know where you stand financially, as to the extent of your current tax refund or liability, giving you fiscal control over your budgets through April.
- You will “check the box” and have a mandatory task put behind you. The feeling of a little bit of freedom is a good one for most people.
- Financial Aid Forms often require early income tax filing. FAF administration is also linked directly with IRS.
- Once last year’s tax is done, estimated taxes for next year are readily determinable and again- better fiscal planning is achieved in budgeting for next year’s taxes.
- Filing with the masses and electronically in February-March puts your return in a bulk collection/ process making it less probable for audit selection than returns which are handwritten, sloppy, late, or extended, as they are in smaller distinct batches.
- Even if your hand-written tax return is perfectly correct, an extra potential source of errors in your return at the Service Center may occur from IRS data entry or other mishandling by IRS personnel and equipment or processes.
- On the subject of mishandling, another potential pitfall is when self-prepared tax returns use tax software which does not correctly align W2 and 1099 box entries with the requirements of the tax code, resulting in erroneous results and likely overstatements of income. There is no substitute for the experienced eyes of a professional tax preparer.
- You eliminate all risk of late filing penalties and associated interest. You might think you’ll have plenty of time to prepare your return on April 14, but you can’t predict what life might throw at you.
- What if I have to pay? Our recommendation is that you promptly e-file your tax returns with a scheduled automatic withdrawal date of April 15th. The government will debit your bank account timely and accurately, and you will have a clean audit trail. This is a sure way to have one of your key fiscal responsibilities compliant and under control.
- Filing early eliminates mistakes that are made from rushing.
This tax instruction column is provided as a courtesy of Di Iorio & Di Iorio Accounting Firm, located at 567 Park Avenue, Suite 203, Scotch Plains, NJ 07076; Emilio A. Di Iorio, CPA, CVA, proprietor. We are available day, evening & weekend hours to answer your questions. Call (908) 451-2016 or visit us at www.diioriocpa.com