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If the IRS owes you money, it's tempting to file your taxes as quickly as possible so you can receive your refund right away. Even though you may want to file before the year is over, there are reasons why taxes for a given year are not accepted by the IRS until the next calendar year. The tax planning team at Daren Katayama C.P.A., LLC, in Kailua Kona, HI, offers professional tax return preparation services and can address your questions and concerns. 

Your Guide to Tax Planning

Financial advisors are often asked by their clients if they should file their taxes for that year at the end of the year. While paying early may seem like a good idea, there are two important reasons you need to wait until the next calendar year to file your taxes.

Late Income

tax planning Kailua Kona HIThe main reason taxes cannot be filed before the end of the year is that you can't be certain you won't receive any more taxable income before the year’s end. If you file before receiving all your forms, you could be setting yourself up for an audit. The IRS compares the information on your W-2 and 1099 forms to your tax return; if the information doesn't match, the IRS flags your return for further investigation.

Document Preparation

Another reason taxes are filed the following year is that financial institutions and employers need time to get your forms ready and mail them to you. Employers have to prepare your W-2 forms and mail them by January 31st. Most other 1099 forms are due by that date as well. This January deadline gives employers and financial institutions time to process and prepare the information from the previous year.

If you need help managing your personal or business finances, you can rely on the tax planning experts at Daren Katayama, C.P.A., LLC, to provide the information you need to maximize your return and reduce your risk of an audit. Call (808) 329-6635 or visit them online to learn more about their tax return services.

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