When Should You Start Compiling Your Tax Documents?
Tax season officially began last week. Have you already started getting your tax documents together? For most people, taxes don’t really become a concern until March or April, but getting your documents together sooner—and even filing early—can be extremely beneficial. So when should you actually start compiling your tax documents? Keep reading to find out more.
When to Get Your IRS Tax Forms Together
When most people think about tax documents, they’re primarily focused on their official IRS tax forms. While some individuals may have begun receiving their official documents already, there’s a good chance that most of yours are still on their way to you. Your 1099s and W-2s will most likely arrive throughout the course of this month. The exception to this would be if the provider of the form (usually an employer or contracted client) offered you the option of receiving your forms electronically. These will typically come in more quickly, so you might already have them ready for you.
Otherwise, there’s not much you can do to hasten the arrival of your forms. However, you should consider creating a list of all the official tax forms that you’re still waiting for. This way, you know when you’ve received all of the forms and are ready to start filing. As soon as the forms are delivered to you, gather them into a single folder until you’ve received all of the forms on your list, or deliver them to your tax preparer as each one is received. You can even do this electronically via email or by uploading them to our client portal.
Please be aware that certain tax forms, like Schedule K-1s, likely won’t arrive until the middle of March. If you’re awaiting a tax form that doesn’t arrive until late in the tax season, we can help you file an extension on the return so you have more time to file after receiving all your tax forms.
When to Collect Your Financial Information
Of course, IRS tax forms are not the only documents you need to file your tax return—and, unlike the tax forms, you have some more control over how soon you gather your financial information. So when’s the best time to start gathering that financial information? The answer is as soon as possible. A good place to start is with your financial statements and donation receipts. Here are some documents you might want to consider collecting:
- Receipts for charitable donations
- Mortgage statements
- Records of rental income
- Receipts for medical expenses
- Proof of home purchase
- Mileage driven for business or charitable purposes
- Receipts for qualifying business expenses
- Personal information, including birthdates, SSNs, etc., for yourself and all dependents
The exact financial documents you need will vary depending on the specifics of your individual financial situation. If you’re not sure which financial documents you need for your taxes, our CPAs can help.
How Soon Should You File?
So, if taxes don’t need to be filed until April 15th, why should you start putting your documents together now? Compiling your documents now makes it easier for you to file early, which can offer the following kinds of benefits:
- Get your return processed sooner – The IRS gets progressively busier the later in tax season it is. By filing earlier, your process will typically be processed much more quickly. This also means that, if you’re expecting a tax return, it will get to your account even sooner.
- Avoid being the victim of tax fraud – A common tactic that scammers use is to file a tax return early in the tax season, before the actual taxpayer files. By getting their false return in first, they can collect a tax refund in your name without the IRS recognizing it as fraudulent. Then, when you file, your return will be rejected. If you file early on, you can get your return in first and avoid the mess that comes from having your return rejected.
- Gather funds for your tax bill – Many people will put off filing their return because they don’t want to have to pay sooner. However, regardless of how soon you file, you still have until April 15th to pay that tax bill. Filing early provides you with an exact number that you will owe, rather than an estimate, and give you time to gather the necessary funds. This is a much better situation to find yourself in than filing at the last minute and being blindsided by a bill you can’t afford to pay before April 15th
- Get more one-on-one attention – It should come as no surprise that, like the IRS, we get busier as the tax season goes on. When you start preparing your return earlier, you can get more one-on-one attention from your CPA and schedule appointments that are more convenient for you when you start working on those taxes earlier.
If you’re ready to start filing those taxes, contact Demian & Company CPAs today to schedule your appointment.