Why You May Want To Wait To File Your Tax Return This Year
You may want to wait to file your tax return if certain circumstances apply to you, such as if you had investments with the now-defunct crypto company FTX or if you own a small business.
As the deadline for filing tax returns draws near, plenty of people are getting antsy to get their forms in as quickly as they can so that they can get their refunds. On the other hand, you might want to think twice before rushing to submit your taxes this year.
There are circumstances in which you might want to consider filing your taxes later, closer to the deadline, or even request an extension, even though tax preparers and the IRS advise you to file your taxes as early as possible. For instance, if you had an account with the defunct cryptocurrency exchange and crypto hedge fund FTX.com, it may take some time to untangle the schemes and figure out how to report the results of your investment on your tax return.
This past December, the U.S. government filed criminal charges against FTX founder Sam Bankman-Fried and several other fellow executives. This now paves the way for taxpayers to use the IRS theft loss rule to claim the loss as an itemized deduction, provided that the theft was considered illegal in the state in which it occurred and that it was done with criminal intent.
In a recent USA TODAY article, Ryan Losi, an executive vice president at certified public accounting firm PIASCIK, commented that “charging FTX in a criminal fraud suit may have helped taxpayers,” but he also cautioned taxpayers that “That doesn’t mean the charges will stick or that outcome will prevail, but it gives taxpayers a leg to stand on and a potential option if they want to explore it” and file a tax return.
Given that estates and trusts require additional time to calculate the tax information as it applies to each beneficiary, calendar-year estates and trusts do not have to provide you with the K-1 tax form until the 15th of April of each year. Those who are self-employed or who own small businesses have the option of requesting an additional five months to fund their retirement savings.
This year, payments to Individual Retirement Accounts (IRAs) are required to be made by April 18; however, if you make contributions to a SEP IRA, you can request an extension on your tax return until October 16 instead. This deadline applies only if you make contributions to an IRA.
In addition, investments can result in tax forms that may arise at a later time, such as K-1s for partners, shareholders, and other individuals indicating their proportionate share of the profits from a business. The 1099-B is a consolidated tax return that comes from a brokerage account. It provides a summary of several types of income, including capital gains and overseas dividends.
Last but not least, delaying the filing of your taxes can give you more time to assess your current financial standing and mull over the possibility of making adjustments that will serve you better in the long run. To lower the amount of taxes you would owe the next year, you could, for instance, consider making contributions to a retirement account or making adjustments to the investments in your portfolio.