Chicago Taxpayers See Benefits of Filing Tax Return Early
Uncle Sam is extending your tax deadline - but you might prefer to say no thank-you, say Chicago bankruptcy lawyers.
Because of a Washington D.C. holiday on April 15, the government is giving taxpayers until the following Monday - April 18 - to mail in our tax returns. But there's no reason to wait until the 15th or the 18th. The IRS officially began accepting returns this week - even for folks who plan to itemize deductions (officials previously told itemizers to hold off until new tax laws went into effect). And the sooner you file your taxes, the sooner you may be able to get that tax refund - and reap the benefits.
Many of us look at filing our taxes as a chore to be completed in April, and usually at the last possible minute. But technically you can file as early as January, as soon as you're received your W2 and, if you have investments, your 1099s.
So why do your homework on a Friday so to speak? Because it can pay off - literally. If you're owed a refund, as many of us are this year, filing your return means you'll get the money sooner. Let's say you file this month and receive your refund by March as opposed to filing in April and getting your money in June. If you can use that money to help pay off a high-interest credit card balance or avoid making late payments, you'll save two months worth of interest and late payment fees. If you invest the money, you'll get two months worth of interest on your balance that you wouldn't have gotten had you waited to file.
Being an early bird pays off in other ways as well. When you're not rushed, you have a better chance of filling out your return correctly - meaning you're less likely to experience an audit or owe any penalties. You eliminate the possibility of being late, also reducing your risk for fees. And if you find that you are going to owe money, you can always wait a bit longer to turn in your return (within reason obviously), and use that time to start saving up for your payment.
There are some caveats, of course. If you think you're going to owe quite a bit of money, filing early is like giving the IRS an interest-free loan. You might as well wait until closer to the deadline so you can at least earn some interest on the money you owe. But even then, you're only putting off the inevitable.
If you've got so much debt that you're not sure how you can make your tax payment - or you've made some tax mistakes in the past - whether you pay early or last-minute doesn't really matter. You need a new financial strategy to ensure that you'll be able to pay your taxes and your other bills without going broke. In many cases, bankruptcy can be that strategy. Bankruptcy offers an effective way to eliminate debt so you can spend your money on the things you need, not on paying off creditors. Learn more about debt and bankruptcy for free when you sign up for a personal debt analysis with one of our professional Chicago bankruptcy attorneys.