The benefits of having your tax return filed early

Receive your tax refund earlier

There are many reasons why you may be due a tax refund – your professional advisor can discuss this with you.

The sooner you file your tax return, the sooner any refund you may be due can be processed.

What better way to boost your cash resources than by claiming a refund from the IRS?

Calculate your tax bill for cash flow planning

Many businesses are currently trying to forecast their cash needs in the short/medium term and one of the biggest expenses the self-employed will have before the end of the tax year will be their income tax bill.

Knowing exactly how much your tax bill will be, will help you to plan effectively for how you will be able to pay it, be that through bank funding or by preparing to engage with the IRS and asking for a phased payment arrangement when the liability falls due.

Remember, filing your return early, does not mean that you must pay the liability immediately. 

Important tax deadlines and dates:

• January 15, 2022  - 4th- quarter 2021 estimate tax payment due

• April 15, 2022 – 1st-quarter 2022 estimated tax payment due

• April 18, 2022 - Individual tax returns due for tax year 2021

• June 15, 2022 - 2nd-quarter 2022 estimated tax payment due

• September 15, 2022 3rd-quarter 2022 estimated tax payment due

• October 15, 2022 – Extended individual tax returns due

Have more time to focus on your business

If business is quieter for you now, your income tax return is a job that you could get done and out of the way. When business is back to normal then you will have more time to focus on getting your business back on track rather than on your tax returns.

Obtaining key information

For those purchasing a house, or for students returning to college, preparing a tax return early means key financial information will be at hand. College students can use the information on Form 1040 to apply for financial aid, and house purchasers can prove their household income.

If either of these scenarios apply to you, whether you owe money or are expecting a refund from the IRS, get ahead, and get your tax return completed early so you have the information you need to hand.

More time to prepare

The more time you give yourself to gather all the information you need to prepare your tax return, the better. This should reduce the risk of errors and mistakes being made, which may not only be costly, but could also mean you end up paying more tax than you need to and having to re-submit your tax return.

If you owe money to the IRS, submitting Form 1040 early, will also mean you have more time to arrange your payment.

Not missing the tax return deadline

File early to avoid needing to request an extension. If you file an extension but don't pay what you owe if you have a balance due, the IRS will charge you interest and penalties on the outstanding tax debt until it is paid in full.  If you own more than you can pay, perhaps because of financial difficulties caused by the pandemic, don’t put off filing. The IRS will start charging penalties and interest on the date the return is due. Minimize failure-to-file penalties by filing early, and paying what you can. You can also set up an installment plan for the balance.

How we can help

We can help you complete your tax return early, so you know how much tax needs to be paid and by when. If you are due a tax refund, it makes great sense to receive this as soon as possible. TaxAssist offers an expert professional advisory service. Contact us today online here to book your free, no obligation consultation.

Last updated: 8th July 2022