Most people don’t start thinking about their taxes until April. Many businesses have to deal with them year-round, but even then, their tax burden may not get as much attention as it probably needs. With the start of the new year, now is the time to start preparing your taxes. There are several reasons to do this, six of which we’ll discuss here.
1. Get Refunds Sooner
One of the most attractive benefits of filing taxes promptly is that you get your refund sooner. If you overpaid over the course of the last year, you’ll be due a refund, and that extra cash can be very helpful if business has slowed down after the holiday season. If you make estimated payments throughout the year, that extra windfall can be put toward this year’s taxes, diminishing your overall financial burden.
2. Gather Financial Information
Starting now also gives you an opportunity to sort out complicated tax scenarios and track down necessary documents. For those with complex financial situations, it’s important to start as soon as possible to make sure everything is filed correctly. If you’re missing any documents, it will give you time to find them, whether by notifying those who were supposed to send them to you or by hunting them down yourself.
3. More Secure
Filing early is also more secure. For individuals and families, there is a risk that someone may attempt to file their taxes on their behalf in order to steal their refund. By filing early, you beat out anyone who may be trying to use your identity for nefarious purposes. The IRS will already have your tax return on file, so if another one shows up, they’ll know something is up.
4. Handle Estimated Taxes
Both established businesses and independent contractors need to pay taxes throughout the year, and by starting now, they can begin handling their estimated tax payments without delay. It can also mean extra time on January’s payment. For instance, if you are an independent contractor and you file your tax return before January 31st, you can actually skip your fourth payment installment (due the 15th) if the full amount that you owe is paid off with your return.
5. Lower Odds of Errors
By starting early, you are less pressured by deadlines. This means less stress and fewer errors. It also means better professional help since tax professionals aren’t nearly as busy now as they will be in April. They’ll be able to dedicate the time needed to make sure your taxes are handled correctly.
6. Better Tax Planning
Tax planning benefits from time, and by starting the process of filing early, you give yourself ample opportunity to plan more effectively for the coming year. You’ll be able to identify areas where changes need to be made, then implement them early to get the maximum benefit possible by the time next year’s tax season rolls around. Tax planning professionals and tax attorneys, such as Hart David Carson LLP, can give you better service the earlier you start, so contact us today to help with planning your next fiscal year.