Tax returns need to be filed at the proper time. If you happen to miss the deadline, then there are chances of you having to pay extra as a penalty amount for paying the taxes late. That’s why it’s always a good idea to file your taxes before the due date. This also has other advantages such as saving a few extra dollars, getting extra benefits, and escaping penalties. It all depends on when you are filing and what’s your objective behind it.
Objective: To Pay as Less Money in Taxes as Possible
Best time to file: Before March 15
The tax software market is quite competitive and that’s why their prices keep fluctuating all around the year. 30 days before the deadline in April, they hike up their prices. The hike in prices isn’t just limited to federal returns. As the demand increases, the fees you have to pay to file state taxes will also inflate.
- If you have hired a professional tax preparer, then reach out to them early during the year so you don’t end up paying a lot more during the days nearing the deadline.
- When your tax returns aren’t complicated, you may get the perk of downloading and using a free tax software. This also depends on how much adjusted gross income you have. If you have less than $73,000, then you may be eligible for a free tax software program
Objective: To Avoid Penalties
Best time to file: By April 18.
If the IRS gets your tax returns after the deadline, it will bill you extra under a late filing penalty. You will get an extra 5% penalty to your tax, extending for the next five months if you fail to pay taxes. They will wait and extend the deadline for five months up to a maximum of 25%. Even if you get an extension, it’s best to pay during April itself. The more you delay this, the more you owe the IRS.
Objective: To Fend Off Criminals
Best time to file: As soon as your paperwork is ready.
The statistics may shock you but there were more than 1.4 million reports of identity theft across the country in 2021. In fact, tax-related identity theft reports are up 45% compared to pre-pandemic years. This is why tax identity theft is still a problem and can cause a lot of trouble in your life.
Fraudsters do this when they have in hand some of your basic information and file it under your name in order to steal the tax refund. File taxes as soon as you have all the information and forms like Form W-2 and other paperwork to avoid getting scammed. This means you will have to do your taxes before January since the portals open at the end of January.
Objective: To Get Your Refund as Soon as Possible
Best time to file: Any time, but online
If you are applying for a tax refund, then avoid mailing them via postal services. Do it electronically by e-filing because the old-school way of sending paper mail can take at least six to eight weeks to process. Whereas, e-filing takes only about 21 days.
- If you are looking to get a direct refund as soon as you have filed your taxes, then deposit directly to the IRS so they can send the money back into your account
- Keep tracking your tax refund. The IRS will notify every movement of the tax return. From the minute it approves your return to the time it reaches your bank account, you will constantly be notified of its movements.
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