Most taxpayers recognize April 15 as the deadline for submitting tax returns. Yet, deciding when to file during the early months of the year can be challenging. Some taxpayers file early to expedite refunds, while others find themselves rushing at the last minute. The assumption that any month before the deadline is suitable isn’t always accurate. Specific months could disadvantage you due to missing documents, tax professional workloads, or other issues.
Filing Early: A Double-Edged Sword
January might seem ideal for filing taxes, especially if you’re eager for a refund. However, a significant drawback is that many tax documents may not be available until late January or mid-February. Employers, investment firms, and lenders require time to finalize year-end figures. Filing prematurely can result in errors or omitted income items, potentially triggering amendments or drawing attention from the IRS. Ensure you have all necessary documents such as W-2s, 1099s, or K-1s before filing. While firms usually send these by January 31, delays or corrections can occur. Double-check electronic delivery methods, including spam folders and online accounts. If documents are missing, promptly contact the issuer.
Timing Your Filing for Accuracy
Even filing in early February poses risks, as you might encounter incomplete or incorrect statements. Brokerage firms sometimes issue 1099 forms in stages, and certain investments may lead to “adjusted” forms by mid-February. Filing with outdated data could necessitate a later amendment, delay refunds, and consume additional time. If your investments are complex, consider waiting until late February when brokerage statements are final. Stay vigilant with email notifications, as providers often alert you to available updates. If complex 1099s are expected, consulting your broker can preempt complications.
Avoiding the March Rush
Tax preparers face increased client demand from mid-March as many who delayed in February rush to meet the deadline. Waiting until late March might leave your accountant overwhelmed, risking rushed work or filing extensions. If you anticipate complicated taxes, book a February appointment. Provide all forms promptly and organize receipts, statements, and forms in one folder to streamline the process for your CPA.
Last-Minute Pitfalls
Filing in early or mid-April may appeal to procrastinators but often leads to frantic searches for missing documents. Although the IRS doesn’t penalize timely extension filings, you must estimate and pay any taxes due by April 15. Without full preparedness, you risk return errors, jammed communication lines, or online system issues.
Filing early can tick off a major to-do list item, but if you owe taxes, holding your funds longer might be preferable. Submitting in January or early February without available funds can create stress over meeting the deadline. If you manage your payment schedule well, file once information is complete and schedule the April payment. If a few more paychecks are needed to cover your tax bill, delay your return within reason, but don’t miss the April cutoff.
The Bottom Line
For individuals and families, tax filing timing can significantly impact stress levels and financial planning. Filing too early without complete information risks errors and potential IRS scrutiny. Meanwhile, filing late could lead to rushed preparation or missing the deadline. Balancing the timing of tax filing with personal financial readiness is crucial. This includes ensuring all necessary documents are in place and understanding your payment obligations.
On a broader scale, tax season affects local economies and the workload of tax professionals. A surge in last-minute filings can strain resources, delaying processing times and overwhelming tax services. Managing your filing schedule efficiently not only aids personal peace of mind but also contributes to smoother operations within the tax preparation industry.
