Early tax return filing has many advantages

Jimmy Rodefer, CPA 03 November, 2022

Filing your taxes as early as you can come January’s filing green flag dropping increases the chance of an earlier refund despite the mountainous backlog of unprocessed returns with which the IRS is dealing, and early filing also helps you avoid being a crime victim.

As of Oct. 7, 2022, a pileup of more than five million unprocessed individual tax returns had yet to be cleared away. This actually represents progress: a few months ago the backlog was more than 20 million unprocessed returns essentially caused by three reasons: COVID-19, rapidly changing tax laws and IRS staffing issues.

At first glance, such a logjam of unprocessed returns might appear to be a downer in terms of getting a quick refund. However, to reduce public discontent, the IRS is trying to do two things at once: reduce the number of unprocessed returns while at the same time getting refunds out the door to those due to receive them.

In a way, the $80 billion in new funding the IRS received in federal legislation passed in August puts more pressure on the agency by raising people’s expectations; taxpayers are going to expect faster and better service. But expectation and reality are different things; almost nothing in government happens that fast.

Filing early can’t hurt (unless you know you’re going to owe a bundle in taxes, then filing as late as possible can make excellent sense).

Another factor in filing early in tax season is that it can cut off any attempt to steal your identity. Crooks follow the money, and there’s been big money in stealing someone’s identity, filing a false return, getting an ill-gotten refund and leaving the taxpayer holding an empty bag when they subsequently file their legitimate return.

With what is called Stolen Identity Refund Fraud (SIRF), the U.S. Dept. of Justice says that thieves are constantly mining for your corporate or personal information: “For example, SIRF criminals have used Social Security numbers stolen from hospitals, nursing homes and public death lists, thereby exploiting some of the most vulnerable members of our communities, including the elderly, the infirm, and grieving families. However, everyone with a Social Security number is potentially vulnerable to having his or her identity stolen.”

If a criminal gets a tax refund using your name before your return is filed, there are a series of identification hoops, obstacles and mountains you’ll have to overcome to prove you didn’t receive the return. Therefore, file early to cut down on the chance you’ll become a SIRF victim.

Receiving your return early and accurately also depends on another factor: your personal preparation. An apt comparison is a kitchen sink full of dirty dishes; the more we put into the sink, and the more we convince ourselves we’ll get about cleaning them soon (but don’t), the more daunting the task when we can put it off no longer. But if we clean them or put them in the dishwasher as we go along, the process is decidedly less burdensome. The same is true for tax preparation: the more disorganized the record maintenance, the more time – and the more burdensome – it becomes to gather tax-related documentation and put it to effective tax preparation use.

Having your records organized is of inestimable benefit when preparing your taxes, whenever it’s done, particularly if your return includes complicated deductions based on interpretations or understanding of the law. This is true whether you do your taxes yourself or if they’re done for you.

Receiving your refund is a matter of time: the time you file your return, the time it takes to process the information, the time it takes to overcome a fraudulent return or an IRS request for more information and the time it takes to prepare your return.

In this case time is, indeed, money.

This article first appeared in KnoxNews.

Early tax return filing has many advantages

Quick Links

Client Resources

Early tax return filing has many advantages

M&A Integration – It’s Not Just About Checking Boxes

Is Your Sales and Use Tax House in Order?

Quick Links

Client Resources