To Get Your Tax Refund as Quickly as Possible, Follow This Rule of Thumb, Says CPA - Chicago News Weekly

Tuesday, January 31, 2023

To Get Your Tax Refund as Quickly as Possible, Follow This Rule of Thumb, Says CPA

Welcome to the unofficial start of tax season. Employers have until January 31 each year to file tax documents such as Form W-2 with the IRS and furnish employees with copies. If you haven’t gotten yours in the mail already, they’re likely on their way.

Even though doing your taxes in February can feel like working on a book report the night the teacher assigns it, you’d be wise to get cracking as soon as you can, tax pros say.

“The general rule of thumb is start as early as possible, whether you’re filing on your own or working with a preparer,” says John Vande Guchte, a certified public accountant and senior wealth advisor at Strategies Wealth Advisors.

Here’s why experts say it’s smart to start on your taxes ASAP.

You’ll get your refund faster … or find out earlier if you owe

The earlier you file, the sooner you’ll get your refund. And for many Americans, that’s a big deal. Some 30% say they rely on their refund to make ends meet, according to a recent survey from Credit Karma. Those numbers are even higher among Gen Z (46%) and millennial (40%) taxpayers.

“Taxpayers should prepare to file electronically and choose Direct Deposit for their tax refund — it’s the fastest and safest way to file and get a refund,” according to recent IRS taxpayer guidance.

In 2022, about two-thirds of taxpayers were entitled to money back, with an average refund of nearly $3,200, according to the IRS. But thanks to the expiration of pandemic-era tax policy changes, Americans can expect smaller refunds this year, and some who were expecting a windfall may even find they owe.

If you’re hit with a surprise tax bill, you’re better off knowing as soon as possible, says Vande Guchte.

“If you know you’re going to owe $1,000 in early February you can still file, even though the payment won’t be due until April 18,” he says. That can give you time to prepare yourself financially to pay the bill, he says.

You may realize you need some expert help

Filing early isn’t just for people with straightforward returns, says Shiloh Johnson, a CPA and founder and CEO of business tax platform ComplYant.

“If you’re a high earner, accuracy is what matters. Starting early means you can get materials to your tax preparers early,” she says. “If you’re a business owner, filing late can hit you with penalties and interest that can turn into a whirlwind.”

Perhaps you begin gathering your documents and realize that you may need help from a pro. Or maybe something major in your life changed, says Jamie Hopkins, managing partner of wealth solutions at Carson Group.

“Maybe you moved out of state or you and your partner got married. Maybe you became self-employed. I would consider using a tax pro that year to get up to speed on how things are going to go in your new situation,” he says.

Small business owners, side hustlers and those with multiple forms of investment income may benefit from a human touch as well, experts say. The sooner you contact one, the better luck you’re going to have, says Hopkins.

“CPAs want to work with you early. Once it gets to March, it’s a lot harder to get your calls returned, and everyone is super busy.”

You’re less likely to get your tax refund stolen

Maybe you’re certain you’ll get a good refund you don’t need right away and know you don’t need to work with a tax pro. Even then, it’s worth filing early to thwart any thieves who may be looking to cash your refund on your behalf.

“If scammers get ahold of identifying information such as your Social Security number and date of birth, they’ll file a tax return as quickly as humanly possible and claim your refund,” says Vande Guchte. “Then when you go to file in March or April, your return gets rejected because someone already filed under your Social Security number.”

You’ll then have to prove to the IRS that the return they have on file is fraudulent, which could delay you receiving money you’re owed — a process which “takes some time and expertise,” says Vande Guchte.

That doesn’t mean that you should race to file online to beat the fraudsters. Tax pros say not to file before you have all of the necessary documents on hand. Because companies send these documents to the IRS, the agency will know if your return is missing information. If that’s the case, you’ll receive a notice, which could delay processing of your return.

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