Six Reasons to File Your Tax Return ASAP

Although the deadline for filing tax returns for individuals, April 15, is still seven weeks away, there are plenty of good reasons why you should get your tax information to your accountant sooner rather than later.

By now you should have received all of the tax documents you need to file your 2013 tax return, including your W-2 (wages from an employer), 1098 (mortgage interest and other items), and 1099 (investment income from dividends, interest, and capital gains). Here are six great reasons to round up your tax information and file your taxes as soon as possible:

1. Lessen the sting of unpleasant surprises:

Finding out that your tax bill is larger than you expected (or your refund is smaller than expected) is never a good thing. But the sooner you learn about it, the less painful it will be. This is because you will have more time to round up the necessary funds. The sticker shock could be especially bad this year because of a slew of tax increases that went into effect for high-income tax payers in 2013. Among the tax increases created by the Affordable Care Act and the American Taxpayer Relief Act are a 0.9% Medicare tax increase on earned income, a 3.8% Medicare surtax on investment income, and limits on personal exemptions and itemized deductions. To learn how much these tax increases might cost you, read our article: Small Tax Changes for 2013 Could Cost You Big.

2. Give your accountant more time to look for deductions:

The earlier you get your tax documents to your accountant, the more time he or she has to spend time thinking about ways to minimize your tax bill. At Eilts & Associates, we compare your current year’s information with previous years’ returns to look for deductions or credits you may have missed and try to identify any strategies that can lower this year’s return. For example, the deadline for making IRA contributions that are deductible from 2013 income is April 15, 2014. This can be a great last-minute strategy for lowering your tax bill while saving for retirement at the same time.

3. Leave time for follow-up questions:

When taxpayers give information to their accountant, it often will be missing a few important items. Getting the initial information to your accountant ahead of the deadline gives the accountant time to round up any missing information or ask follow-up questions that could lead to valuable tax savings.

4. Get your refund sooner:

As an accountant, nothing pains me more than seeing my clients give out free loans to the federal government. But this is essentially what happens if you are due to get a refund and you wait until the last possible moment to file your return. This is especially true if you use the six-month extension and wait all the way until October to file. I’m sure you can think of much better uses for that money than letting it sit in the U.S. Treasury Department’s coffers.

5. Keep your money as long as possible:

Many people who anticipate owing money on their tax return will wait until the deadline to file because they want to hang on to that money for as long as possible. While this is smart in theory, it doesn’t make sense in practice. By post-dating your check to April 15 or setting up the electronic withdrawal for April 15, we can make sure you keep your money in your bank account until the last day possible, regardless of when you actually file your return.

6. Don’t hide behind the extension:

Every taxpayer is allowed to apply for an automatic six-month extension for filing his or her tax return. Tax return is the key word in that sentence because the extension only applies to getting your paperwork to the IRS, not your money. You still owe the full amount on April 15, and you will be charged interest and possibly penalties for any amount unpaid after that date. At Eilts & Associates, we want our clients to send us at least their W-2 as soon as possible, even if they plan on using the extension. This allows us to estimate whether they will owe anything on April 15.

If you have any questions about filing your tax return, please contact us at 773.525.6171 or bart@eiltscpa.com. We look forward to working with you this spring!

#Individuals