January 31, 2013 : Glen Craig - Guest Contributor
Should I File Now — or Wait to File?
Ed Note: E-file is officially open, and we’re off to the races! If you haven’t filed your 2012 taxes yet, you may be considering whether you’re going to switch up your usual routine: get them done & out of the way soon — or to wait until early April to get them in just under the wire? There are advantages to filing now; but there are, for some, advantages to waiting it out, too. So far, the IRS seems to be on track to process returns (as far as we know) on schedule and will release most refunds within 21 days, so volume is not a big consideration at this point. Glen Craig of Free From Broke joins us today to talk through the logic behind early or late-season tax filing.
Taxes. Most people aren’t fond of doing them (how’s that for an understatement?) but they need to get done.
The question is – Do you file them early or wait until the last minute?
There are arguments for both. Take a look at these pros and cons to filing your taxes early.
- You get it over with. Let’s face it, we all live busy lives and we tend to be at wits end to get done what’s needed as it is. Getting your taxes done early is a huge weight off your shoulders. And by doing it earlier you can take the time you need to make sure your taxes are done correctly. When you wait until the last minute you tend to rush through the process, opening the door for lack of preparation or potential DIY mistakes.
- You get your refund sooner. You’re due a refund. That’s your money. Get it back as soon as you can! When you file early, you can potentially get ahead of peak filing times – and the sooner you file, the sooner your money gets back to you. File early and that refund money can be sitting in your checking or savings account to be used to pay bills, invest, pad savings, do household repairs, you get the picture. Why would you wait to get it back?
- Make adjustments for the coming year. Let’s say you’re due a sizable refund – it may be because you have too much tax withheld. When you file early, you’re in the tax-focused mindset and can adjust your W-4 for the 2013 tax year so you can have more money in each paycheck. A refund is certainly nice, but I’d rather have my money as soon as I’ve earned it – rather than wait for a windfall next tax season.
The case for late-March or April tax filing
- You May Owe Taxes and Don’t Want to Pay Now The holiday season can be tough on budgets – and many people use January to recover from a big hit, pay off credit card bills or rebuild savings. If you are going to owe taxes, then you might not want to pay that money out right now. You might need some time to allocate funds to pay. It may be advisable to visit a tax pro to get a good sense of what you may owe – and then file later. You have until April!
- Straggler Forms and Corrected Statements Don’t make the mistake of attempting to prepare your taxes before you have all of your financial statements and supporting documents in hand. Forgetting the wrong document could cost you, especially if it’s something that will lower your taxable income.
- Strategic Budgeting Some people who are due a refund prefer to wait – as a budgeting strategy of sorts. With the IRS ‘holding’ a sum of money for you, you can’t spend it. Saving up for a big Spring vacation? You can ensure the fund stays intact until you’re ready for the windfall by waiting to file and waiting to receive the refund money.
I’m one to prefer filing my taxes early. I like knowing they are taken care of. If I’m due a refund I want that money in my account as soon as possible.
When do you file your taxes? Do you tend to file them early?