Don't File Your Taxes Too Soon. Here's Why.

Even if you think you have all the information you need to file your return, there are good reasons to wait.

Feb 1, 2014 at 1:15PM

You've probably gotten your W-2 tax forms from work by now, and you might be rearing to get your taxes filed to get your refund on its way. But there are good reasons to hold off before filing your taxes too soon.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, runs through some key reasons why you should hold off on filing your taxes too early. Dan notes that often, forms from short-term jobs you might have forgotten about or from investment accounts end up getting sent late, surprising taxpayers when they finally arrive. Moreover, even if you've already gotten tax forms, some brokers are notorious for reissuing corrected 1099s due to updates that weren't provided to them on time. Dan uses master limited partnerships as an example, noting that while Kinder Morgan Energy Partners (NYSE:KMP), Enterprise Products Partners (NYSE:EPD), and other MLPs do their best to get K-1 tax forms out by mid-February, other companies that report on K-1s aren't always as timely. Linn Energy (NASDAQ:LINE) notes on its website that it has until mid-April to get K-1s to investors, even though it aims to have them out well before that. Dan concludes that filing early can just create the hassle of having to file an amended return later, and it's far easier just to wait and file once you're sure everything's 100% correct.

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Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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