Filing Your Income Tax Early Might Help You Save On Taxes
Many income taxpayers wait until the eleventh hour to file their income tax returns. While some people work best under pressure and choose to procrastinate on filing taxes, there are those who simply forget to file by the April 30 deadline.
Waiting to file your taxes till the last minute can put you under tremendous pressure. Everyone makes mistakes, especially when under the stress of gathering documentation, crunching numbers and lowering tax liabilities as much as legally possible – let alone the possibility that the e-filing might not work properly due to a large number of users.
Despite these very real reasons, there are many others benefits to get your act together early this tax season:
1. Eliminate tax deadline stress
Though filing taxes may be an unpleasant task, it’s best to get it out of the way as soon as possible. Give yourself a fake deadline—well ahead of the deadline—to get your taxes filed.
It’s always best to get it done as soon as possible so that you do not get tangled among the last minute rush taxpayers. Begin your preparations and execute your income tax e-filing process as soon as possible.
The sooner you start on your taxes, the more opportunity you have to make sure you claim all the tax reliefs, tax deductions and tax rebates you’re eligible for. Don’t put yourself in a position where you have to cut corners in order to meet the deadline.
Remember not to rush through the process. That’s how mistakes happen. And when it comes to taxes, those mistakes can come with a huge Ringgit sign. Get started early so you have time to get the job done right.
Once your income taxes are filed, reward yourself for being an efficient and responsible taxpayer. You can then relax and watch others stress out about getting their taxes done on time.
2. More time to plan out financials
When you file your taxes, you’ll know exactly how much you will have to pay or how much refund you can get back (if your employer practices Monthly Tax Deductions, also known as PCB).
However, you won’t have to pay in full until the filing deadline on April 30. Preparing your income tax e-filing early will give you enough time to arrange your payment, if any. The more time you have to come up with the money, the less likely you are to crack your budget or drain your emergency funds to pay off.
File your taxes early to know how much you owe, plan out your financials, and get that tax bill out of the way.
Besides, filing income tax returns early can be used as a means to reduce your tax liability. You practically get one liability off your shoulders and concentrate on the rest.
3. Faster tax refunds
Yet another common reason to file taxes early is to receive your tax refund earlier, if you have any. As most taxpayers are on Monthly Tax Deduction (MTD/PCB), where a percentage of their salary is deducted by their employer for income tax, there is a high chance that you overpay your taxes, especially if you are eligible to claim tax reliefs.
Filing your income taxes electronically, and giving the correct bank account details, will enable the Inland Revenue Board Malaysia (IRBM) to deposit the refund directly into your bank account. It is by far the fastest and most efficient way to get your income tax returns. Your tax returns, big or small, can come in handy when cash is tight, or you can easily plan where to invest it.
Taxpayers using e-filing typically gets their refunds credited directly into their bank accounts within 30 days after the income declaration is made.
4. Protect your income tax returns from identity theft
Filing income taxes early may not eliminate the threat of identity theft, but it can protect your refund. The purpose of a fraudulent tax return is undoubtedly to pocket your tax refund. This scam occurs early in the tax season, well before most taxpayers file. In 2015 alone, there were five cases of cheating and attempts to cheat tax records, involving tax refunds of almost RM200,000.
If you file taxes early, the IRBM will automatically reject the fraudulent application(s) under your name.
Take every possible precaution to keep your income tax details private and confidential, and reduce the risk significantly by filing your taxes early.
5. Avoid paying penalty
If you fail to file your tax returns before the April 30 deadline, you will be liable to pay a penalty. You might think that you have plenty of time to prepare your e-filing as end of April might seem far away, but you can’t predict what can happen suddenly.
You might sit down at the last minute to do your taxes only to discover that something is making your tax situation more complicated and that you won’t have time to figure it out before you submit your income taxes.
Planning for additional tax reliefs or gathering receipts from the previous year may take time. There could be three possibilities in this situation: over claiming your reliefs, missing out some reliefs, or missing your tax filing deadline altogether. All of these scenarios cost money – if not in missing your reliefs, it’s paying a hefty penalty.
Why risk making a rushed mistake that could lead to a costly audit?
Avoid the possibility of being late and owing more – or worse, wasting money on penalties – which could have been easily channelled elsewhere.
Put your best foot forward and march out early to file your taxes. Typically saves you from the hassle of any last minute rush. Avoiding procrastination can give you a lot of peace of mind. File your taxes today!
If you need some help, use our Malaysia Income Tax Calculator to help you calculate your tax savings.