Tax season is here. This yearly duty is something that a good portion of citizens put off until the last minute, with some even requesting an extension to file later. However, today I have 8 reasons for you to consider filing your taxes early. Listen in to discover why you might want to bite the bullet and file your tax return early this year.Discover why you might want to bite the bullet and file your tax return early this year. Click To Tweet
Outline of This Episode
- [1:12] 8 reasons to file your 2021 tax return early
- [4:18] Why you should try to get as small a refund as possible in retirement
- [8:09] Should Marion invest 25% of her portfolio in a fixed annuity over 10 years?
8 reasons to consider filing your taxes early
Kay Bell (who has an awesome blog name–Don’tMessWithTaxes.com) has put together a great list of reasons to consider filing your taxes early. Pay attention if you have been debating whether to file now or later.Pay attention if you have been debating whether to file now or later. Click To Tweet
- Get the rest of your Child Tax Credit. In 2021 the IRS issued half of CTC payments monthly to help families fight economic problems as quickly as possible during the pandemic. If you did receive this credit, be on the lookout for letter 6149 from the IRS. You’ll need it to determine how much more of the tax credit you’re eligible for when you file your taxes this year. Filing sooner rather than later will get the rest of the money into your hands.
- Get any shorted Covid relief payments. If you didn’t receive the full amount of the 3rd economic impact payment (EIC) last year, you’ll be able to claim that when you file your 2021 taxes and you may be eligible for the remaining balance. Watch for letter 6475 in your mailbox which will state the amount you received from the IRS. If you didn’t receive the 3rd stimulus payment at all you won’t receive the letter. Simply claim it on your 2021 return to receive the rest of your credit or put it towards your tax bill.
- Get your refund sooner. The sooner you file, the sooner you’ll receive your refund. If you file electronically you may even receive your return in 21 days. I do want to throw in my own disclaimer that you should strive for as little of a refund as possible in retirement. A $6,000 refund could easily be an extra $500 per month of retirement income.
- Beat out the tax ID thieves. If you file early, you’ll be beating out potential tax thieves before they can attempt to file a tax return in your name by using your Social Security number.
- Figure out how to pay what you owe. Filing early gives you the opportunity to evaluate exactly how much you need to pay and will give you more time to consider how to come up with the money to pay your taxes.
- Find a tax professional. It is important to find a tax professional earlier than later in the season when they are already busy with their existing clients. Waiting until the last minute could even cost you more.
- Get to work on your state taxes. The sooner you finish your federal return, the sooner you can get started on your state and local returns.
- Start focusing on your 2022 taxes. Filing your 2021 taxes will help you get a better picture of how you can improve your tax planning strategies for the next year.
This is a great list to encourage people to get started on their taxes. I’ve had my thoughts on tax planning for a while now that I’m cohosting the Retirement Tax Podcast with Steven Jarvis. Check it out if you are interested in tax planning strategies in retirement.
Resources & People Mentioned
- The Retirement Tax podcast with Steven Jarvis and Benjamin Brandt
- Retirement Tax Services from Steven Jarvis
- 8 reasons to file your 2021 tax return early by Kay Bell
Connect with Benjamin Brandt
- Get the Retire-Ready Toolkit: https://retirementstartstodayradio.com/
- Follow Ben on Twitter: https://twitter.com/retiremeasap
- Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter
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