Here are two more reasons procrastinators should not wait when it comes to filing their annual taxes: identity theft and increased savings. That’s according to Fidelity Investments, which said that filing taxes earlier can lessen your chances of falling victim to identity theft and provide more time to find tax-smart strategies that can lower your taxable income and thus the amount you owe Uncle Sam.
Take identity theft for starters. In a recent Fidelity blog post, the Boston-based fund manager said that filing a tax return as soon as possible is the best way to protect against tax fraud identity theft. “For the scheme to be successful, a criminal files a fraudulent return and collects a refund in your name before you do. If you file your legitimate return before a crook tries to file one for you, the fraudulent return is rejected,” wrote Fidelity. According to the firm, a common reason people delay filing taxes is that they are awaiting necessary tax documents from an employer, financial institution, charity or other source. In those cases, tax filers should be proactive and ask for the documentation instead of sitting idly by waiting.
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But keeping the tax scammers at bay isn’t the only reason to file taxes as soon as possible. According to Fidelity, if you file your taxes early, you will have already identified the potential to reduce your taxable income with a contribution to a tax-advantaged investment account. The sooner the contribution is made, the quicker you will be able to invest it and potentially see the money grow tax deferred. Procrastinators who don’t prepare their taxes early may not realize the opportunity, or even worse, they miss out because they are scrambling at the last minute to get the taxes filed.
What’s more, if you spend the time upfront to look over your 2016 tax return before filing the return for 2017, you may be able to spot an error that could get you some money back. This will also prevent you from making the same mistake again. If you wait until the last minute, you won’t have the time to do a deep dive on past returns. “Tackling your 2017 tax return may be a dreaded chore (because of complexity or the prospect of owing additional tax) or a welcome event (because you are due a refund). Either way, getting started early may help make your tax-filing season less stressful and potentially save you some money,” wrote Fidelity in the blog. “Beginning your tax preparation now may help you avoid surprises, give you more time to gather your documents, reduce your taxable income, and even protect you from identity theft.”
Source: on 2018-02-20 11:41:15
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