Many things in life come down to timing, and tax returns are no exception. Wait too long, and you could miss the filing deadline, setting you up for interest charges or even penalties. It’s always a good idea to file by the deadline — April 17 this year — but you might be able to save money, beat crime or realize other advantages if you file during other parts of tax season. It all depends on your objective.
The market for tax software is competitive, and providers often change their prices throughout the year. Prices tend to go up during the 30 days before the April deadline, and not just for federal returns. Fees to file state returns may rise as well when demand peaks.
If you’re going to hire a human tax preparer, get on that person’s calendar early, or it could cost you. The average fee to expedite a return is $85, according to the National Society of Accountants.
Also, you might be able to get free tax software, especially if your tax situation isn’t complicated or you have less than $66,000 of adjusted gross income.
If your tax return is MIA after the April 17 filing deadline, the IRS could hit you with a late-filing penalty of as much as 5% of the amount due for every month or partial month your return is late (up to a maximum of 25%). You can get an extension, but you have to do that by the April deadline, too.
Avoid the mistake of thinking that getting an extension means you get more time to pay. Drag your feet past the April deadline, and you’ll owe interest, plus the IRS could also assess a late-payment penalty, which normally costs 0.5% of the outstanding tax each month, to a maximum of 25%.
Tax identity theft is a big problem. From January to September 2017, the IRS received over 200,000 cases of tax-related identity theft. Tax refund theft generally starts by accessing someone’s personal information, then filing a fake tax return under the person’s name to pocket the refund. If you file before a criminal does, there’s no refund to steal — in theory, at least.
Keep criminals’ grubby hands off your refund check by filing your tax return as soon as you have your W-2 form and other paperwork. That could mean doing your taxes in February or even earlier. The IRS typically begins accepting tax returns in mid-January, and employers usually send out W-2s by the end of that month.
If you want your refund right away, don’t mail a paper return. Refunds from old-school paper returns can take six to eight weeks to process. Filing your return electronically (“e-filing”) lets the IRS hit the gas on your refund. The refund is issued within 21 days in most cases. And don’t wait for a paper refund check to wend its way through the U.S. Postal Service, either. If you want your refund as soon as possible, choose direct deposit so the money goes right into your bank account.
Taxpayers can check the status of their refunds at IRS.gov/refunds. There, the IRS will notify you when it gets your return, when it approves your return and when your money is on the way.
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