How to determine the best time to file your tax return: Don’t rush to the finish line, tax experts say
As tax season begins, you may be eager to file your taxes for a faster refund and check off the annual task on your list.
For most filers, the tax deadline is April 18, and the IRS urge the Americans to prepare before filing to avoid processing and refund delays, as well as future notices from the IRS.
“You don’t want to race to the finish line with this,” said certified financial planner John Loyd, owner of The Wealth Planner in Fort Worth, Texas.
Lloyd, who is also a registered agent, prefers a mid-March filing date. Here’s why.
Why It Makes Sense to “Hold Down” and File in March
Typically, ignoring those details triggers an automated notice from the IRS, which can delay processing or take time to resolve, he said.
Most tax forms arrive between late January and mid-February, but others may arrive later.
That’s why Loyd is targeting a mid-March filing date, to ensure customers have all the necessary forms, including documents that may need corrections. For example, if someone discovers an error on their W-2 at work, correcting the error and reissuing the form can take time.
“For most of my clients, I really urge them to hit the brakes,” he added. Of course, you’ll still want to give yourself plenty of time to meet the April 18 deadline to avoid a late filing penalty.
Avoid tax identity theft by “filing before the fraudsters”
That said, there’s no reason to wait once you have all your necessary forms. One reason to file early at this point is the risk of tax-related identity theft, said Eric Bronnenkant, CFP and chartered accountant at Betterment, a digital investment adviser.
Tax related Identity theft occurs when someone uses your social security number to file a claim and claim a fraudulent refund. You can find out through a rejected tax return or a letter from the IRS, among other warning signs, according to the tax authorities.
“Reporting before fraudsters is a good idea,” Bronnenkant said. But one way to protect yourself is to sign up for a Identity Protection PINor IP PIN, he said, which is a six-digit password to file your return.
The downside is that you’ll have to keep track of a different IP PIN each year, which the IRS send by email or you can recover online.
How to determine the best time to file your tax return: Don’t rush to the finish line, tax experts say
