A Few Good Reasons to File Your Taxes Now

Tax season is well underway. There are some very good reasons to get your taxes done now versus later. Here are a few to consider:

1. Get Your Money Back

If you are due a refund, people who file their taxes early often receive their monies from the government 10 days quicker than those that file later in the season.

2. Allow for Surprises and Complicated Situations

Give yourself enough time to allow for any surprises or complicated situations. You can start the tax return preparation process even if you have not yet received all brokerage statements and K-1s. Send your information to your tax preparer as soon as you have the majority of needed documents.

3. Plan for the Inevitable

If you owe the IRS money, you have until April 18th to pay. But, you can still complete your return early and turn it in. Knowing how much you owe early has benefits because it will give you more time to arrange your finances to accommodate your tax bill.

4. Lower the Risk of ID Theft

One good incentive to act promptly this tax season: fraud prevention. Identity theft is a huge concern come tax time. The IRS helped nearly 900,000 victims of tax fraud last year alone.

While the IRS has announced several measures the agency says will prevent tax fraud, filing early is one good way to prevent others from trying to file a return in your name.

The IRS also recently announced that in January, 2016 identity thieves used malware in an attempt to generate E-file PINs for stolen Social Security Numbers (SSNs). An E-file pin is used to electronically file a tax return. The IRS states that no personal taxpayer data was compromised or disclosed by IRS systems. The IRS also is taking steps to notify affected taxpayers by mail that their personal information was used in an attempt to access the IRS application. The IRS is protecting the accounts by marking them to as an extra measure against tax-related identity theft. The IRS identified unauthorized attempts involving approximately 464,000 unique SSNs of which 101,000 were used to access an E-file PIN. The IRS Statement on E-filing PIN is available at https://www.irs.gov/uac/Newsroom/IRS-Statement-on-Efiling-PIN. States are also on high alert after the filing of fraudulent returns last year.
More to Consider

Tax time is prime time for IRS scams. One other anti-fraud tip to remember: The IRS never initiates contact with taxpayers about their accounts through e-mail, text messages, or other social media — so if you get an unsolicited email claiming to come from the IRS, avoid opening attachments or clicking on links, and forward it to the IRS.

5.  IRS Audits

For those who are fearful of an audit, preliminary data from the IRS showed that audits of individual taxpayers fell to their lowest rate in 11 years. Less than 1% of individual taxpayers — just over 1.2 million individuals — were audited in the 2015 fiscal year, the lowest share since 2004.

Yet the highest earners are more likely to be audited than everyone else. Top audit red flags include: Not reporting income, a large change in income, being self-employed, and taking higher-than-average deductions.

If you have any questions regarding your tax situation, as always, please contact your Warady & Davis LLP advisor at (847) 267-9600.

 

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