6 reasons why you should wait to file your tax return
Thursday, January 19, 2023
My husband and I have a lot in common. We also are a lot different.
I tend to obsessiveness, wanting to take care of things as soon as I can. The hubby, on the other hand, is more deliberative. Unless it absolutely has to be done immediately, he's OK with waiting. And waiting and waiting.
We've managed to make out differing approaches work. And I must admit that sometimes, he's right to put off projects. Not always, but sometimes.
Situations change, making moot what originally looked like the right move. Other times, the delay prevents us making what would have been a wrong move. And in a few cases, if a job was done on my timetable, the changed circumstances would have meant redoing it.
Those circumstances can apply to tax filing, too. New or corrected forms arrive. A late-breaking tax law changes things. Or a spouse remembers a payment he forgot to tell his partner about. Not naming any names, just saying.
The key is to file your taxes when the time is right. And that right time can be later. Here are 6 reasons to wait to send the Internal Revenue Service your tax return.
1. To make sure you have all your tax statements.
If the only data you need to file is from your job's Form W-2, then you probably can (and should) file as soon as you can. Many folks, however, get a lot more tax statements than just a W-2. These documents not only have data necessary to properly fill out a tax return, but they also are copied to the IRS.
Some issuers of these so-called third-party reporting statements are very efficient and get them out early each January. Most of them also are available electronically. You're likely to get an email notice that you can go to the issuer's website and download your tax information you need to file your return.
But some are like my hubby. They wait until the Jan. 31 deadline that issuers are given to send tax documents. And a few still snail mail them. In these cases, be patient.
You'll need even more patience if you get any of the tax documents that aren't on the Jan. 31 delivery schedule. In fact, these usually aren't issued until well into the filing season or even beyond, such as the K-1 form issued for partnerships, LLCs and S corporations. They don't have to be sent until March 15. If you need a K-1 to file, there's no way to do so until you get it.
Filing without the correct information means delayed processing, slowed refunds, an amended Form 1040-X return filing, and dealing with the IRS much more than you ever wanted.
2. To make sure you have all other tax information.
Formal tax statements that you need to file your taxes are issued in many cases, but not all. Sometimes in order to report your accurate earnings amounts, you'll need to check all your financial records, such as bank accounts or online payment apps.
For example, you got a 1099-NEC forms for the freelance contract work you picked up to supplement your main wages. These forms were sent to you because you earned $600 or more.
But some of your other earnings were less than the statement triggering threshold. A check of your bank statements, for example, could job your memory of that $599 your neighbor paid you for the new shelf you handmade to fit the awkward space in his garage.
Also double check that you have all the details on potential tax breaks, such as medical expenses if you're still itemizing and claiming these costs. Or the expenses you paid for the care of your young children so you could work. You need these amounts — as well as the caregiver's tax identification number — to claim the child and dependent care credit.
Again, if you find such income or expenses after you file, well, you know the amended return drill.
3. To sort through your personal tax complexities.
If you're one of the taxpayers who gets lots of tax statements, that's an indication your return is more complex. And the more complicated your taxes are, the greater the chances that you'll screw them up if you're in a hurry to file.
If you have more involved taxes — such as side gigs or your own business or investments or a big, messy family — you'll probably need time to sort through all the related tax implications. And if your company is still letting you work remotely, at least for part of your work week, you could owe taxes to multiple tax collectors if your home and employing workplace are in a different state or city tax jurisdictions.
These complexities likely will require some time to work through. They also mean that while it's a good idea to start your return early, then take your time reviewing your tax choices and carefully reviewing your 1040 and associated material before sending it to the IRS.
4. To allow you to find a tax professional.
The tax complexities you encountered in #3 also might convince you that you need more help than a tax software package can provide. In this case, start your tax professional search now, but realize that it's a process that shouldn't be taken lightly or done quickly. You'll need to determine the type of tax pro that best fits your needs. Then you must thoroughly check out potential tax preparer candidates. And after you find the perfect tax preparer, expect that your more complicated return will be filed later, possibly even extended.
5. To ensure you understand your return.
I know, most of us just want the filing over with ASAP. I get it.
But it's important to know what's on your return, whether you fill it out yourself or it's done by a professional. When each of us signs our 1040, either pen-to-paper form or with an electronic signature, we are attesting to its accuracy, placing any legal ramification for the return's entries squarely on you, the taxpayer. When you sign a joint return, the responsibility is on both of you, even when one spouse did the actual filling out of the forms.
So if you have questions about why a deduction was or wasn't claimed or how come your tax bill was bigger this year than last, ask. Ask your tax software's help option if that's how you're doing your taxes. Ask your tax-preparing spouse. Ask the tax professional you hired. And ask and ask and ask until it's totally clear.
6. To get all your returns right the first time.
All of this post's previous filing procrastination situations ultimately lead to one conclusion. Once is enough when it comes to doing your taxes.
If you're too eager to file your return, you might have to do it again because in your rush you didn't include necessary information or made a mistake. Then you have to do it all over again by filing the previously mentioned and usually dreaded Form 1040-X as soon as you discover it. The longer the tax error sits there, the more tax penalties and interest on what you owe add up.
If you also file states taxes, which most U.S. taxpayers do, the potential for follow-up corrections is doubled. Most states rely on your federal tax return entries. When those are wrong, so is your state filing, meaning you'll have to re-do it, too.
However, if you can just let your original federal tax return sit there a bit before you file it, you'll give yourself time to take another look. Such review can be valuable. A bit of time and fresh eyes often make a mistake suddenly seem amazing obvious.
You also might find these items of interest:
- 7 reasons to file your tax return early
- Why we put off filing our taxes and how to stop it
- Answers to these filing checklist questions could make a big tax difference
- Tax season 2023 officially starts Monday, Jan. 23; Free File opens earlier, on Friday, Jan. 13
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