Don’t File Your Taxes Too Early

[jeffrey]

By Valerie S. Johnson

Usually, if you are expecting a sizeable income tax refund, you want to file your return as soon as possible to collect the money that Uncle Sam withheld from you all year. On-line filing has made it even quicker for you to receive your refund.

However, don’t be in a rush to file early for tax year 2006. Why? Because of changes in the tax laws, banks, brokers, and mutual funds sometimes cannot provide accurate information to you by their end of January deadline. A number of financial institutions will likely be forced to send you revised 1099 forms in February, March, or even as late as April.

Some experts advise you to delay filing until March, because the initial 1099 form you receive may not be accurate. If you file too early and then get a revised 1099, you may need to file an amended tax return to claim an additional refund or to pay tax that you subsequently owe.

[poundwise]

Thanks for the info Jeffery.

Although, if you keep your own meticulous records or have a minimal amount of this sort of data to track, you would be able to tell if the 1099 is accurate or not before filing and thus avoid the problem as well.

Good heads-up though.

[MonkeyMama]

WE had amended 1099s out to September last year with many of our clients. Crazy. I wouldn't wait for them - the amendments do not stop April 15th, they can amend them at any time.

Anyway, generally when we get amended 1099s, they change little, and I have never gotten an IRS notice re: a tax return change due to 1099. I guess like us they figure the difference is too little to really bother with it.

But keeping your own records is good advice - definitely eliminates the problem. The word of the 1099 is not always final - seen many mistakes...

Of course if it was me and it changed in my favor down the road I would simply amend my tax return. But probably sounds a little difficult or scary to joe blow average. IT is a way though to file early, get your refund, and you can always correct it later.