Every year, taxpayers across the country will be preparing to pay their taxes. Many will more than likely wait until the last minute until they begin to file their federal income tax returns. With tips available on how to do your tax returns last minute, this will still be an option some will do this year.
Leaving it till the last minute might be a common trend some have done every year for a while now; this year might be the time to consider trying to do your taxes early. There are many reasons for filing your taxes early, some of which include financial rewards.
If you are hoping to be more organized this year, here are a few ways to prepare yourself for the upcoming tax return season. By starting early in your preparations for the upcoming tax season, you can reap the numerous benefits that come with being organized.
Steps To Take To Prepare
Filing your taxes is more than likely a task that is not high on your list of priorities at the moment. The start of a new year is often the time when you try to get into either a new routine or the old one you had before the holiday season.
However, the upcoming tax return season will come around sooner than anticipated. When it does arrive, you do not want to be in a position where you are rushing to collect everything you need to file your tax return due to leaving it till the last possible minute. Procrastinating and pushing back when you start will only increase your chances of missing something. It could be that you have forgotten to account for a vital financial document. You may have even missed an opportunity to save yourself money since you did not claim on a specific deduction that was available to you.
Many of these issues are easily avoidable. All you need to do to ensure that you avoid these issues is by starting the preparation process earlier than usual. If you are unsure of where to start, these are a few steps to take to help prepare you for the upcoming tax season.
- Decide How You Will File – When filing your tax returns, you can choose to send them back electronically or send a physical copy through the post. If you choose to send it back through the post, remember that it will take a little longer for your refund to come through. Also, you will have a shorter timeframe to have it completed and sent back. Completing your tax return electronically will mean that you will have a little more time to complete it than sending a physical copy if you choose to leave it till the last minute.
- Collect Personal Information – One of the most crucial pieces of information you should start collecting is yourself and your family. It includes the birthdates and social security information for your spouse, yourself, and any other dependents.
- Gather Income Documents – It is impossible to file your taxes without the essential financial information on hand. Start early by collecting all the relevant paperwork from your employer and other financial accounts under your name. Having all the relevant documents at your disposable will make the process of filing your taxes far easier, as it reduces any stresses that you may have closer to the due date.
- Find Out What You Owe – If you are filling out the form yourself, consider using online resources to help you determine how much you owe. You can use an income tax calculator Quebec to determine what you owe to prevent you from spending more or being at risk for not paying enough.
- Look At Credits And Deductions – It is likely that the CRA (Canada Revenue Agency) will have various tax credits and deductions that you might be eligible to claim. By starting the process early, you can look over the different options to see if there could potentially help save you money. Ensure that you spend time comparing the options available, as some might have specific requirements that need additional forms to be completed and sent in.
- Seek Professional Help – Filing your tax return can be an overwhelming task. Since there is the added pressure of completing right, it does put people under a lot of stress to complete. If you do not feel like you can complete it yourself, you can ask for help from professional tax preparers. By starting your preparations early, you can use your additional time to research tax services or potential professionals to help you file your taxes.
Benefits Of Filing Tax Return Early
Preparing in advance for the upcoming tax return season will offer a plethora of benefits. All of which are yours to reap should you choose to start preparations early. The most obvious benefit to filing your tax returns before is being organized. It provides you with time to ensure that you have everything you need to file your taxes. You can seek professional help early, meaning they will likely be less busy. Also, tax planning services for how to file a tax return early.
Being organized and starting early means spending time ensuring that you have utilized the tax credits and deductions available. If there are any issues, you can resolve them as quickly as discovered. In addition to this, it can prevent you from making simple mistakes that could be costly.
Choosing to start filing your tax return early will be something you are thankful for doing when the deadline day approaches. When you see others under copious amounts of pressure and stress to complete it on time, you can bask in the luxury of knowing that yours has been completed. You may have even received your tax refunds. There are countless benefits on offer by filing your tax returns early; these are just a selection of them.
Faster Tax Refunds
A common and popular reason to file your taxes earlier than usual is to receive a quicker tax refund. If you are filing your tax return electronically with a direct deposit into your bank account, it is one of the fastest ways to get your refund. If you were to send a physical copy of your tax return, it could take several weeks longer for you to receive your refund. If you want to receive your refund, quickly choose to fill out and return an e-file. Alternatively, if you did want to send in a physical copy, fill it out and send it sooner to ensure that you receive your tax refund as quickly as possible.
Prevent Tax Extensions
A tax extension is granted additional time provided to someone to have their tax returns filed and sent it. Obtaining an extension is something to avoid as they are most commonly given to those who are disorganized than those in financial need. If you choose to leave it till the last minute to sort your finances and gather all receipts, you increase your chances of needing the support of a tax professional. They will help you to organize your finances and complete your tax return.
If your request for an extension is granted, yet you have not paid what you owe in the balance you have due, it is likely that the CRA will charge you interest. Both of these issues are easily avoidable by preparing your tax return earlier in the year and sending it off as soon as possible.
Prevents Tax Return Identity Theft
If, in the unfortunate event that someone gains access to your social insurance number, they will have the necessary pieces of information to file a tax return in your name. The reason for fraudulent tax returns is not to pay your taxes; it is done to claim and pocket your tax refund. It is an issue that happens earlier on in the tax season, usually many weeks in advance of most taxpayers choosing to start the process of filing.
To prevent this from happening, take every precautionary step possible to keep your social insurance number protected and hidden. Additionally, if possible, aim to file your taxes as early as possible.
The Bottom Line
Preparing for the upcoming tax return season is a great way to keep organized. If you are taking the time to prepare yourself for the next tax season earlier than usual, consider utilizing this time to be more organized with your other finances. Look more closely at your finances and see if there is anything that you could do to improve them. If you are currently not closely monitoring their credit, now could be the best time, especially if you are already in the process of organizing.
Preparing your finances in advance is an excellent way to ensure that nothing gets missed. It helps to prevent mistakes from being made. Most of all, organizing your finances for the upcoming tax return season can offer you peace of mind knowing that it has been sorted. You will not have to go through the stressful moments and emotions that come with leaving it till the last minute. Once you start preparing, the chances of a smoother process are higher. After you have sent your tax returns, you will have a process in place that you can use for the following year.