We all know that the time to start filing taxes isn’t 10:41 p.m. on April 15th, sitting wild-eyed at the computer, desperately trying to get TurboTax to load while grimacing in dread of how much money you might owe Uncle Sam. And yet, every year, more than 20 percent of American taxpayers wait until April to get it done, mainly because doing your taxes sucks.
Common sense tells us that we should all be filing taxes sooner rather than later, but the awful surprise of discovering we might owe money to the government keeps us putting it off and off. It also doesn’t help that tax forms are needlessly difficult to understand, meaning you have to work hard to potentially learn you’re suddenly out $600, and that’s not how anybody wants to spend their day. But waiting doesn’t change how much you owe and when you owe it, and there are a lot of great benefits to getting your taxes done early (and I should know, because I’ve already managed to fuck up my 2019 taxes).
Why Start Now?
Naturally, the biggest benefit of filing early is that you get your tax returns back sooner, assuming you’ve got one coming; with direct deposit, you’ll get your money in a matter of days if you file in February, or a few weeks if you wait until April. If you owe, filing earlier means you’ll have more time to figure out how to get the money together before it’s due. “You may owe federal taxes, but have a refund coming from your state,” says Dawn Howard, CPA and owner of JDawn Consulting in Louisville. “If you get your state refund back early, you can use it to help pay your federal taxes, because no matter when you file your paperwork, you don’t have to pay the IRS until April 15th.”
Filing your taxes early also helps prevent tax fraud, although for a simpler reason than you might suspect. “The most common tax theft is basically when somebody gets a hold of your W-2 and they file your taxes, set it to their bank account and claim your refund,” Howard tells me. The earlier you turn them in, the less time someone else has to pretend to be you and file them first, in order to have your refund sent to their bank account. Whether it’s you or a thief, the second person who tries to turn in taxes using your social security number is going to have a very bad time, courtesy of the IRS.
Another benefit of filing early means that you’re less likely to pay your taxes late, assuming you’re not a dope like me. There’s a certain horrible irony in writing an article explaining to people the best time to start doing their taxes when I know exactly when I should have started doing my 2019 taxes, and that’s one full year ago. I know this because Howard is my accountant, and she told me this in early 2019, after I’d gone from being an employee with my taxes pre-taken out of every paycheck, to becoming a freelance writer, where I would need to make sure I kept track of what I owed the IRS.
Freelancing Isn’t Free
Howard spent more than a decade doing giant, international tax work for Fortune 500 companies, until a certain point in late 2016. “I came into work not planning to quit my job, and around lunch break I’d decided to quit my job,” she explains. “I gave 48 hours notice by the end of the day. It was like a switch.” Now she does taxes and consulting for nonprofits, small companies and freelancers, because we all need the help. She’s much happier.
I tell you all this because Howard is a freelancer herself, which means she has to pay taxes quarterly, exactly like I should have been doing last year. I ask her why freelancers (with a few exceptions) have to do it this way, because it seems kind of arbitrary and unfair, especially when we don’t know our total amount of income — and thus how much money we’d truly owe — until after the year ends.
“If you think about it, when you’re a full-time or part-time employee, you’re getting your taxes taken out in real time, too,” she explains. Even though we all tend to think about paying our taxes as something we do when we file, that’s not true — we’re just paying whatever else we owe. If you’re an employee, the taxes your employer takes from your paycheck are being given to the IRS every month, not one lump sum when the year is over. “Just because you’re a freelancer, that doesn’t mean the IRS wants to wait until April to get all the money you owe them. They want your money now.” And if you’re wondering whether getting an extension would help, let me assure you it does not — at least in terms of money.
Paying for It
There are two things due by April 15th: The paperwork you file, and the money you pay. Turning in either late will cost you a penalty and interest — and if you fail to turn in both, you’ll be penalized for both and thus charged interest for both. But shockingly, the IRS is waaaaay more interested in getting your money on time than your paperwork. Whether you’re a traditional employee or a freelancer, companies are required to tell the government what they’ve paid you, so the IRS doesn’t actually need you to file your taxes to know a ballpark estimate of what to charge you.
In terms of knowing what you owe, it’s very rare that a company fails to provide W-2s, but if they do, you can call the IRS at 1-800-829-1040 to tattle on them; meanwhile, freelancers should plan on paying around 30 percent of their income. Anyone can request a six-month extension to file their taxes, but again, there’s no extension for paying. You can potentially work out a payment plan, but like any time you pay a bill late, you will be charged interest.
Even if you disagree with the amount you owe, you still have to pay what the IRS says you owe by April 15th or it’ll cost you. You can potentially get the base amount adjusted later — say if you file an extension and figure out an extra deduction or something — and the IRS will eventually cut you a check for the difference, but they’re not going to reimburse you for the interest and penalties you’d rack up by not paying the amount they told you on time. So I’ll be giving the government some extra money for 2019, which I feel extremely confident will not be used on something worthwhile.
“I’m a big fan of extending as long as you’ve paid your tax, since your tax debt will continue to accrue,” Howard tells me. “Your accountant is more likely to look at your return and see a deduction they may not have thought of when they’re working non-stop in April.”
If you’re using a CPA — an especially good idea if you’re a freelancer of some kind, since our taxes are much more complicated than regular employees — it’s not great for them to be doing your taxes at 10:48 p.m. on April 15th either. “I’m going to do a better job filing your taxes when I’m less busy, too,” says Howard.
Just Get Started (Seriously)
So, when to start filing taxes? Whether you’re using a CPA or not, Howard recommends trying to start work on your taxes around mid-February, because while companies are mandated to put your W-2s and 1099s in the mail by January 31st, there are stragglers, and it’s obviously best to make sure you have all your paperwork in so you can get an accurate account of what you owe or are owed. If you happen to be reading this March, don’t stress — just get started now so you’ll have a cushion of time if there ends up being a problem. And if you’re reading this in April, and your taxes are a bit complicated, you might want to consider asking for that filing extension rather than trying to rush it. Just remember to send Uncle Sam a check either way.
Whenever you get started, no matter how incomprehensible taxes might seem or how financially doomed you suspect you are, just learn from my mistake, and turn them in on time. Unless you want to give the government some extra money, in which case, you’re very welcome to pay my late taxes, too.
Rob Bricken
Rob Bricken has been a professional nerd for 20 years, the editor of Gizmodo’s geeky pop culture site io9, and was the creator of the poorly named but fan-favorite news blog Topless Robot. When the zombie apocalypse comes, he’ll be among the first to die.
