By Alison Wardle

For those looking to file their taxes early, the official start date for tax filing season began on Monday, January 27, 2025. While some individuals prefer to wait to file their tax returns, others choose to file as soon as possible. There are many benefits to filing early, but there are also some drawbacks to consider before determining the best time to file your tax returns. Below is an overview of the pros and cons of filing your taxes early. 

There are numerous benefits to filing your tax returns early. Here’s what they are: 

Minimize the Risk of Identity Theft

Filing early will not eliminate the risk of identity theft completely, but it will minimize the risk tremendously. The sooner you file your tax return, the less chance there is for someone else to file fraudulently using your name. Identity theft involving a tax return can lead to numerous tax reporting complications, and resolving the issue with the IRS can take months. 

The IRS has identified several warning signs that may indicate a fraudulent return has been filed in your name, including: 

• Your return is rejected due to a duplicate Social Security number. 
• You receive an IRS notice that your return has already been filed. 
• You receive an IRS notice of changes to your online account that you did not make.

To protect yourself, you should never share your personal information unless you are certain the requesting party is legitimate. Additional safeguards to avoid identity theft include obtaining an Identity Protection Pin, creating an IRS tax account with multifactor authentication, and regularly monitoring your financial and tax accounts for suspicious activity. 

More Time to Plan 

Getting a head start on filing your taxes gives you more time to estimate capital gains distributions, harvest losses, make additional charitable contributions, contribute to a 529 savings plan, and estimate what you will owe on your return. 

Filing early provides more time to set aside funds for any income tax liability, since payment is not due until the April 15^th filing deadline. This will help you avoid having to take out any short-term loans to cover your tax bill. 

Avoid Tax Extensions 

Filing your return early can help eliminate the need to file an extension on your return. Extensions of time are typically needed because of a lack of organization, missing essential paperwork required to file, or more time is needed to gather additional deductions. If you wait too long to file your taxes and the deadline is approaching, you are increasing your chances of filing extensions. 

While an extension may seem beneficial because it provides more time to file, it does not extend the time to pay any taxes owed. Payment is still due by the April 15^th filing deadline. If you fail to pay on time, the IRS will charge a failure-to-pay penalty, including interest and fees, for every month—or part of a month—the balance remains unpaid. 

The earlier you file your return, the more time you’re allowing yourself to save and plan, alleviating some of the stress during the busy tax season. It also makes it easier for you to contact tax professionals and file your return without having to file an extension unnecessarily. 

Although filing early can relieve stress, you may be giving up certain advantages that come with waiting to file. While being proactive reduces the time constraint, waiting to file can offer the taxpayer some unique benefits. 

Here are a few key points about filing later to keep in mind:

Greater Chance of Filing Completely and Accurately

Whether you are an employer or an employee, everyone needs to receive tax forms from a third party. Employers could make errors in the W-2 forms that they send to employees, which can lead to mistakes on the employee’s tax return. Additionally, independent contractors and self-employed individuals require 1099 forms from each of their clients.

Coordinating the timely receipt of all these forms is nearly impossible, so filing early could result in missing information. If forms are missing or incorrect, the taxpayer would need to amend their tax return—an additional task that adds to the stress of tax season. Waiting to file could reduce your overall workload by giving employers and clients more time to correct errors and provide all required forms.

Decreased Risk of Being Audited

The IRS is more likely to scrutinize returns that are amended after they’ve been officially filed, so submitting your return too early may increase the chance of an audit. If a taxpayer files before all forms are complete or accurate, any later amendments could draw additional attention from the IRS.

More Time to make IRA and HSA Contributions

Delaying your filing gives you additional time to contribute to your individual retirement accounts (traditional, Roth, or SEP) and health savings account. By doing so, you can lower your taxable income and potentially reduce your overall tax liability.

This information has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for tax, legal, or accounting advice. If you have any questions about filing your return, please do not hesitate to contact us at Lear & Pannepacker.

Signed into law on July 4, 2025, The One Big Beautiful Bill (OBBB) is a comprehensive piece of legislation covering a wide scope of topics. While the bill covers issues such as military spending and energy independence, a substantial portion of the bill’s impact lies in the tax code. As such, it is important to understand the tax implications of this bill and how you can plan accordingly.

Business Tax Provisions

For those who own and/or run their own businesses, the tax reforms within the OBBB may be advantageous. In many cases, businesses can strategically plan purchases and take larger deductions during the year of purchase. Below are some examples of tax reforms that present businesses with the opportunity to reduce tax liability.

Research and Experimental Expenditures: Full expense of R&E cost is restored, reversing the 5-year amortization requirement from the 2017 TCJA (Tax Cuts and Jobs Act).

Interest Expense Limitation: Starting 1/1/25, the bill permanently restores the EBITDA add back for all future years. This effectively increases deductible interest capacity.

Bonus Depreciation: 100% bonus depreciation allowance is now permanent, with no scheduled phase out.

Depreciation for Qualified Production Property (QPP): Accelerated depreciation schedules are introduced for domestic manufacturing equipment and allow 100% depreciation on QPP.

Section 199A (QBI Deductions) Utilizing the Itemized Deduction: The 20% deduction for pass-through business income is made permanent.

PTET Deductions: Clarifies and expands deductibility of Pass-Through Entity Taxes (PTET) at the federal level, which fully allows pass through entities to deduct state and local taxes.

Individual Tax Provisions

For individual taxpayers, the OBBB contains many changes which will have a direct impact on tax returns. Notably, the Tax Cuts and Jobs Act (TCJA) had temporary provisions for individual taxpayers which have been made permanent as a result of the OBBB. While some of these reforms can serve to reduce individual tax liability, other changes have eliminated opportunities to take higher deductions on your tax return. The following changes illustrate some of the most prominent provisions that individuals should make themselves aware of.

Individual Income Tax Rates: The lower tax brackets from the TCJA are made permanent, including the top rate of 37%. 

Dependent Care Assistance Program: Increases the annual contribution limit for dependent care assistance programs from $5,000 to $7,500 for single or married filing jointly. 

Standard Deduction: The increased standard deduction is made permanent and indexed for inflation. 

Charitable Contributions for Taxpayers Utilizing the Standard Deduction: Allows non-itemizers to take a $1,000 deduction for single taxpayers and $2,000 for married and filing jointly.

Charitable Contributions for Taxpayers Utilizing the Itemized Deduction: A 0.5% AGI floor is established for charitable contribution deductions, meaning that only the donations exceeding 0.5% of their AGI will be deductible.

State and Local Tax Limitation for Individuals (SALT): The $10,000 SALT cap is raised to $40,000 starting in 2025.

Itemized Deduction Limitation: The Pease Limitation is permanently repealed.

Miscellaneous Itemized Deduction: Elimination of miscellaneous itemized deductions are made permanent.

Alternative Minimum Tax (AMT): AMT exemption amounts are increased and indexed permanently.

Excess Business Loss Limitation: The excess business loss limitation of $313,000 has become permanent for the tax year beginning on 12/31/25.

Estate and Gift Tax Exemption Amount: For 2025, the estate and gift tax exemption are $13,990,000. Starting on January 1, 2026, the exemption will be $15,000,000 and indexed for inflation in subsequent years.

Qualified Opportunity Zones (QOZ): Narrows the scope of census tracts that are eligible to be nominated as QOZs and provides increased tax benefits for investments in rural areas. QOZs also have new reporting requirements.

Clean Energy Tax Provisions

The passing of the OBBB has also seen major changes relating to clean energy projects. Some of the most notable changes relate to clean energy credits, some of which are phased out (or completely eliminated). However, the bill has also presented new opportunities to limit tax liability via the extension/introduction of new clean energy credits. Below is a brief overview of credits that will be eliminated, phased out, or introduced (as well as changes in deduction limits):

Termination of Previously Owned Clean Vehicle Credit: Ends the credit for used EVs purchased after 2025.

Termination of Clean Vehicle Credit: Phases out the $7,500 new EV credit by 2027.

Commercial Vehicle Credit: Introduces a new credit for electric and hydrogen commercial vehicles.

Alternative First Vehicle Refueling Property Credit: Extended and expanded credit for rural and low-income areas.

Energy Efficient Commercial Buildings Deduction: Increased deduction limits and simplified qualification rules.

Clean Electricity Production Credit: New technology-neutral credit replaces existing wind/solar credits.

Clean Electricity Investment Credit: Offers a 30% credit for investments in qualifying clean energy projects.

This information has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for tax, legal, or accounting advice. If you have any questions about the OBBB, please do not hesitate to contact us at Lear & Pannepacker.

An IP PIN is a six-digit number issued to individual taxpayers by the IRS. Its purpose is to provide taxpayers with an extra layer of protection when filing their tax returns. Although your Social Security Number (SSN) is the primary way to identify yourself when filing your taxes, there is always the chance that criminals may gain access to your SSN. If someone were to steal it, however, the absence of your IP PIN would prevent them from filing a return in your name. 

Any individual who has an SSN or an Individual Taxpayer Identification Number (ITIN) and can verify their identity is eligible to request an IP PIN, even if they have not experienced identity theft. To enroll in the IP PIN program, taxpayers can create an account on IRS.gov and select either continuous enrollment or one-time enrollment. One-time enrollment issues an IP PIN for the current calendar year. Continuous enrollment, however, means that you will automatically receive an IP PIN every year and you should expect to receive a CP01A notice with a new IP PIN from the IRS between mid-December and early January by physical mail. If you move, you must file Form 8822 to inform the IRS of your new address.

The CP01A notice is required to file your tax return; the notice will contain your IP PIN and instructions on how to use it. Since your IP PIN will change every year, it is important to keep your CP01A notice with your tax records and submit it to your tax preparer along with your other tax documents.

Failure to include your IP PIN on your current and prior year federal income tax returns filed within the calendar year may cause processing delays or rejection of your return. The IP PIN is only valid for federal income tax returns; do not use it for state income tax returns — only use state-issued PINs for your state tax filings if your state provides them.

If you would like to be proactive in preventing tax-related identity theft, enrolling in the IP PIN program may be a beneficial option. If you are already enrolled, do not discard your IRS notice; store it securely with your tax records and make sure that your tax preparer receives it.

If you have been assigned an IP PIN, and lost it or didn’t receive a CP01A notice, you will need to retrieve your IP PIN online or have it reissued to avoid processing delays. If you file your tax return electronically without your IP PIN, the IRS will reject it. If you paper-file your tax return, the IRS will need to verify your identity which will delay your refund. 

To retrieve your IP PIN online, you will need to login to your online IRS.gov account – your IP PIN is available on your “Profile” page. If you don’t have an IRS.gov account, you will need to create one and complete identity verification. For minor dependents, IP PINs can’t be retrieved online – you must call 800-988-4490.

To get your IP PIN reissued, contact the IRS directly at 800-908-4490 (U.S) or 267-941-1000 (International). Once your identity is confirmed over the phone, the IRS will mail your IP PIN within 21 days to the address on record. Note that your IP PIN can’t be reissued if you opted into the IP PIN program online after 2019 or it is after October 14, and you haven’t filed your current or prior year tax return.

This information has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for tax, legal, or accounting advice. If you have any questions about IP PIN program, please do not hesitate to contact us at Lear & Pannepacker.