3 Pitfalls You Might Encounter if You Try to File Your Taxes Too Early

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

You don’t necessarily want to be first in line. 

You’ll often hear that getting ahead of deadlines is a good thing to do, whether it’s finishing a project at work, paying a bill, or filing your taxes. And at this point, the IRS is already accepting returns for the 2022 tax year.

But while it’s a good idea to file your tax return before April 18, which is this year’s filing deadline, you don’t want to submit yours too soon. Here’s why.

1. You might be missing key forms

Companies and financial institutions like banks and brokerages are supposed to make 1099 forms available to tax-filers by Jan. 31. You’ll need those 1099 forms to report things like self-employment income, interest income in a savings account, or capital gains and losses in a brokerage account.

If you file your taxes too early, you might do so before some of those forms arrive. And that could put you in a situation where you then have to file an amended tax return, which has the potential to be a hassle.

2. You might have all of your tax forms, but corrected ones could come out later

It’s definitely not unheard for a given entity to issue a 1099, only to then send out an amended one several weeks later. That could cause a problem if you file your taxes too early.

Let’s say you receive a 1099 form from a given freelance client reporting $2,400 in income. You might rely on that form and put that figure onto your tax return. But what if that same client realizes it forgot to account for some work you were paid for at the end of the year, and it sends you an amended 1099 for $2,800 a few weeks later?

At that point, you’ll need to amend your tax return, because if the IRS gets a copy of that amended form (which it will), it could flag your return due to underreported income. So not only should you wait for your various tax forms to arrive in the mail or electronically, but you should actually then sit tight for a few more weeks in case amendments are issued.

3. You might rush through the process for no good reason

Rushing through your tax filing is a good way to make a mistake. And that mistake could have consequences, whether it’s landing you on an audit list or leaving you with a smaller refund than you’d otherwise be entitled to.

Rather than put pressure on yourself to get your taxes done as quickly as possible, give yourself enough time to go through the process carefully and methodically. You’re better off submitting your tax return in late February or early March and doing so correctly than submitting it in early February and realizing you’ve botched a number of key points.

It’s a good idea to not wait until the last minute to file your taxes. But there’s a danger in being too early as well, so keep that in mind as you set your own personal filing deadline.

Our picks for best tax software

Our independent analysts pored over the perks and user reviews for the most popular tax provider services to land on the best-in-class picks to file your taxes. Get started by reviewing our list of the best tax software.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More