Generally, the only people who like tax season are accountants. For most everyone else – unless you are expecting a significant refund – it’s a dreary but necessary time.
Doing your taxes early has always been a good idea, but for many people procrastination – or life - gets in the way and it becomes difficult to hit the deadline. While in the past, the solution may have been to file for an extension, filing early – before this year’s deadline of Tuesday, April 17 – may be better option .
In 2018, filing an extension may not be a good idea – and it could potentially open you up to fraudulent activity and identity theft. Tax fraud has become a significant problem in recent years. TurboTax lists preventing identity theft as reason number five on its list of why you should file taxes early. By filing an extension, taxpayers are giving criminals more time to access the information they need to file a fraudulent tax return. The IRS has a web page related to this issue, along with specific steps to take if someone files a fraudulent return using your information.
Filing your 1040 form early becomes one of you best defenses against fraud. And – since the average tax refund last year was over $2,800 – you’ll get your money sooner if you file earlier. In the states where Truliant Federal Credit Union has locations, the average refund last year was between $2,500 and $2,700.
By law, all employers are required to supply W2s by January 31. The same date applies for 1099s. Once you have all your W2s, 1099s and your other tax-related paperwork collected, file your taxes as soon as possible.
Tax professional or DIY?
If your tax situation doesn’t change significantly from year to year and your circumstances don’t involve moving-target complications like having income from an S corporation, real estate income, trusts, farm income, etc. – and you have the discipline to sit down and slog through the process – you can save hundreds of dollars by doing your taxes yourself or online.
But if you have a complicated financial life, you might lose a significant amount of money through miscalculations or overlooked deductions. In this situation, a tax professional is probably worth the investment.
If the only thing that changes from year to year are your raw numbers, then you might want to try doing your taxes yourself. It’s not difficult to follow the model from last year’s forms – even if they were done by you or a tax professional – and just calculate all the new numbers.
But if you don’t like numbers and you don’t have the discipline or the time to sit down and do your own taxes, it’s certainly nice to be able to hand over all your relevant forms to a tax professional and watch them magically and accurately successfully file federal and state returns.
How to file
Some people still like doing their tax forms with pen and ink, but the majority of filers are using tax-software preparation programs. The programs have the benefit of being able to put in your core data once and then updating everything each year.
Last year, over 120 million tax returns were filed electronically. That represents about 92% of all returns. If you go back to 2005, only 51% of tax returns were filed electronically, and in 2001 it was only 31%.
The benefits of electronic filing are significant:
- The IRS doesn’t have to re-enter tax payer information into their system, reducing data-entry errors.
- Taxpayers receive an acknowledgment from the IRS that their return has been received.
- Refunds are received faster, usually within three weeks or less and it’s faster if you choose to have your refund deposited directly into your checking account.
Of course, if you aren’t comfortable with computers, paper and pen still work for tax returns. It just takes longer to receive your return, if you qualify for one, and there is a greater chance of errors.
Tax return direct deposit
Over 81 million taxpayers had their tax return deposited directly into their checking account last year, whether filing through paper or electronic means. There are clear benefits to using direct deposit. First, you eliminate the possibility of your return check becoming lost in transit. Second, you'll typically receive your money faster. To have your tax return successfully deposited into your Truliant account you need to provide the IRS with two pieces of information:
Truliant discount on TurboTax
- Truliant routing number: 253177832
- Your account number, which can be found on one of your checks at the very bottom to the right of the routing number.
If you plan on filing your taxes yourself this year, keep in mind that all Truliant members are eligible for a $15 discount on TurboTax federal tax return products. For more details, please visit our Tax Preparation