Preparing a tax return is not most people's idea of a good time. As a result, we tend to procrastinate and wait until the last minute to file our returns. However, there are good reasons to start preparing your tax return as soon as you have all the necessary documents:

1. Reduce the Chance of Tax Identity Theft and Fraud – By filing as early as possible, you can reduce the chances of a thief filing a fraudulent return in your name. Greg McBride, Senior Vice President and Chief Financial Analyst for Bankrate.com, calls tax ID fraud "a massive headache for people" and refers to the practice as "…one that people too often don't find out about until after the fact. They go to file their tax return and it gets rejected because a return's already been filed under their Social Security number."

Confirms Betterment Head of Tax Eric Bronnenkant, "The sooner that you file, the less...

Early Birds Should Be Careful

Have you been waiting patiently to file your taxes? If so, you're in luck. This tax season is now underway. February 12th, 2021, was the first day that the IRS would accept tax returns for the 2020 tax year, either electronic or paper copies. (You can mail in paper copies at any time, but they won't be processed until the tax season kickoff date set by the IRS.)

Why file your taxes early? A better question is: Why leave taxes hanging over your head until April and then spend a stressful week trying to complete your return? In addition, filing early can thwart any identity thieves trying to file a false return in your name – and if you have a tax refund coming, why wouldn't you want to get it as soon as possible?

Even so, early filers must take care to avoid mistakes that negate the benefits of an ear...

One of the most controversial provisions of the 2017 Tax Cuts and Jobs Act (TCJA) was the limit it placed on state and local tax (SALT) deductions. The TCJA capped the deduction on combined payments for state and local property, sales, and income taxes at $10,000 beginning in the 2018 tax year.

According to the Joint Committee on Taxation, the SALT deduction cost the government $100.9 billion in potential 2017 tax revenue. The estimated SALT deduction costs for 2020 dropped to $24.443.1 billion. It's a large part of the tax revenue increase that paid for the corresponding tax cuts.

Many taxpayers won't be affected by the SALT changes. However, people in states with high taxes and high property values can easily reach $10,000 from either property taxes or state taxes alone.

How do you know if you'll be affected? Check Schedule A on last year's tax return. If you entered more than $10,000 on line 5d and your tax status hasn't significantly changed, you'll...

Do the words "tax return" send shivers down your spine because you always end up with a gigantic headache and little or no tax refund at the end? Maybe the problem is in preparation and planning – or lack of it. Tax law is complicated, and it takes a coordinated, sustained effort to optimize your refund. Let these nine tips help you acquire the best refund possible.

1. Don't Delay – The IRS doesn't start processing forms for the 2020 tax year until February 12, 2021, but that doesn't mean you have to wait until right before this year's deadline of April 15. If you need motivation, think of what you can do with a tax refund windfall. The sooner you file, the sooner you can put your refund to use. Two other reasons to avoid procrastination: the earlier you begin, the more time you'll have to locate any missing documents and data; and the sooner you file, the harder it is for a tax identity thief to target you.

2. Contribute to Retirement Pl...