Experts Say Filing Taxes Early Produces No Major Benefits
By Dan Rafter, The Times, Munster, Ind. Knight Ridder/Tribune Business News
Mar. 22 - April 15 looms. And what are you doing? You're still sifting through shoeboxes stuffed with receipts from last January and February.
And as you struggle to find that misplaced interest statement from your bank and that W-2 form you haven't seen since your mail carrier delivered it in January, you make a promise: Once again you vow to be more organized next year.
You even boast to yourself and to anyone within earshot that next year you're not going to wait until the last minute to start the hated process of preparing your income tax forms.
To make matters worse, your next-door neighbor is relaxing as March slowly gives way to April. He filed his taxes in January. Can you believe it?
Well, here's a little advice: Don't feel too bad. If you're one of the procrastinators know that you're in good company. Many other folks wait as long as possible before filing their taxes, especially if they're not expecting refunds from either the state or federal governments.
And the best news? Financial experts say that those folks who do file early receive no real benefit from doing so.
"I can't think of any benefit you get from filing early, besides the obvious one of getting your refund back sooner," said Darlene Kittredge, a certified public accountant in Chesterton who is now busy preparing income tax forms for her clients. "There are people who want to get it out of the way, and by filing early they get their refund a little earlier. But filing early or late has no impact, for instance, on whether or not you get audited."
Debra Gruzosky, office supervisor with the H&R Block office in Chesterton, echoed Kittredge. In fact, she said that some people are too anxious to file their returns early. They send off their federal and state taxes only to find that they forgot to include an essential document.
"Here they are in January and they think they have everything they need to get their returns done," Gruzosky said. "So they send them off early.
Sure enough, they look back and see that they forgot to include their tax information from some unemployment they might have collected. They might have forgotten about a little self-employed work they did during the year."
And mistakes are no good for filers. They mean a new return and additional fees.
Mark Chamberlain, owner of Lakeside Financial Group in Chesterton, knows all about early filers. He knows a friend who each year rushes to send in his return in January. Chamberlain, like other financial pros, could think of little reason for this haste.
But he did think of one, albeit a fairly small one.
"The first and second quarters of the year are historically some of the better performing times of the year for the stock market," Chamberlain said. "If you get your return back early enough, you could invest it in the first or second quarter, when the market often does well."
No need to wait All this being said, there is no real reason not to file early if you can. The Internal Revenue Service, in fact, recommends this.
The agency's Jan. 5, 2004, Tax Tip advises the following: "Earlier is better when it comes to working on your taxes. The IRS encourages everyone to get a head start on tax preparation."
The reason for this is simple. Those that start early are less likely to make sloppy errors in filing their taxes. If they find themselves struggling with their returns, they can log on to the IRS Web site or call the agency with questions before every other filer in the country tries to do the same thing.
Of course, peace of mind isn't reason enough for many residents. Pat Brummer, IRS public spokeswoman for Indiana and Kentucky, said more than 1 million Indiana residents had filed their returns as of early March.
But 2.8 million residents of the state have to file taxes this year, Brummer said. This means that more than 1.5 million Hoosiers still had to file as of the beginning of the month.
"We always hope that as many people as possible file early," Brummer said. "That way, if they have a problem with their return they can make a correction and file an amended return by April 15. If there is a problem and you file an amended return and send it in after April 15 and you owe taxes, you will have to pay a penalty and interest."
More state residents are filing early these days thanks largely to the ability they, and filers across the country, now have to send in their taxes electronically. Of the more than 1 million state residents who had filed their taxes by early March, 739,000 of them did so electronically, Brummer said.
As far as refund speed goes, people who file early will get their refunds back a bit more quickly than will those who wait until April 15, Brummer said. The normal processing time for a refund from taxes filed through the traditional mail is six to eight weeks, she said. Those who file early will receive their refund after about six weeks. Those who wait until April 15 will receive it after about eight weeks.
The best way to guarantee a quick refund, though? According to Brummer, it's by filing electronically.
The normal processing time for an electronic return is about two weeks, she said.
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