Taxes: File Now or Wait?
As tax season moves from “waiting on documents” to “ready to file,” many investors face a familiar question: Should I file as soon as possible or is it better to wait?
The answer depends less on the calendar and more on the complexity of your financial picture. While filing taxes early can be helpful in some situations, investors with partnerships, private investments, or active brokerage accounts often benefit from a more measured approach. When it comes to taxes, fast isn’t always best. Instead, accurate and strategic usually wins.
When Filing Early Makes Sense
For individuals with straightforward tax situations, filing early can be efficient and reassuring. If your income is primarily reported on W-2s or simple 1099s, early filing may offer a few advantages:
- Faster refunds and earlier clarity on whether you owe or will receive money back, which can help with cash flow or estimated tax planning.
- Reduced identity theft risk, since filing first makes it harder for fraudsters to submit a fake return using your information.
- More runway to adjust, especially if you discover under-withholding and want to correct estimates for the current year sooner.
In short, early filing works well when your tax picture is complete, all your documents have arrived, and nothing is likely to change.
When Filing Early Can Backfire for Investors
For many investors, however, filing too soon introduces risk rather than relief.
Corrected 1099s are common for investments like REITs, mutual funds, ETFs, and other regulated investment companies, where income classifications may be finalized well after initial forms are released.1 Custodians often flag this possibility directly and suggest considering an extension when these holdings are involved.
Corrected 1099s don’t have a single “official” release date, but there is a common pattern. For brokerage and investment accounts, corrections most often begin appearing in late February and March. However, in some cases they might be released as late as early April, particularly when funds reclassify dividends or capital gains. Because the IRS allows corrections to be issued well after the initial forms are released, investors who regularly see corrected 1099s may benefit from waiting until closer to late March before filing to reduce the likelihood of amendments.
Filing before all final forms arrive often leads to one outcome: amending the return. Filing Form 1040-X adds time, cost, and administrative burden, and amended returns can take weeks, or longer, for the IRS to process. In some cases, they also trigger additional correspondence that could have been avoided altogether.
Why Waiting (or Extending) Can Be Strategic
Waiting to file, or filing an extension, is not a red flag. For many investors, it’s standard practice.
As long as you pay a reasonable estimate of what you owe by the April deadline, a federal extension simply moves the paperwork deadline to October 15. It does not create penalties for filing late, nor does it increase audit risk.
More importantly, waiting allows your return to reflect final, accurate numbers. This reduces the likelihood of IRS mismatch notices and eliminates the need for amendments. Many CPAs treat extensions as the norm for investors with partnership income or complex investment activity.
Waiting to file, or filing an extension, is not a red flag. For many investors, it’s standard practice.
How Timing Impacts Tax Strategy
Timing isn’t just about convenience: it directly affects strategy.
Key planning decisions like capital loss harvesting, Roth conversions, qualified business income deductions, net investment income tax exposure, and alternative minimum tax calculations all depend on finalized data. Provisional numbers can distort outcomes.
One effective approach is treating the return as a “dry run.” You can model scenarios early to understand potential liabilities or opportunities while waiting to file until final 1099s and K-1s arrive. This preserves flexibility without locking in assumptions.
Late-arriving forms can also affect real-world planning. Incomplete or incorrect returns may slow loan approvals, disrupt cash flow expectations, or create surprises when corrections reveal additional tax due.
A Practical Rule of Thumb
Your goal isn’t speed. Instead, submitting the most accurate, strategic return by the deadline should be your metric.
- Filing early works best when: You have W-2 income or simple 1099s, no K-1s, no history of corrected forms, and you want to close the book on last year quickly.
- Waiting or extending makes sense when: You hold K-1-issuing investments, REITs or funds that frequently issue corrections, or expect late information that could materially change your tax outcome.
How Filing an Extension Works
A federal extension gives you six additional months to file, typically until October 15, while still requiring payment by April 15.
You can request an extension by:
- Making an online IRS payment marked as an extension
- E-filing Form 4868 through tax software or IRS Free File
- Mailing Form 4868 with your estimated payment
Paying at least 90% of your actual tax liability by April 15 generally minimizes penalties, and paying more (if possible) can reduce interest.
State rules vary, so it’s important to confirm whether your state accepts the federal extension automatically or requires separate action.
The Bottom Line
Tax season isn’t a race: it’s a process. For investors, waiting to file can be a strategic choice that leads to cleaner returns, fewer surprises, and better alignment with long-term planning.
If you’re unsure whether filing now, waiting, or extending makes the most sense for your situation, a quick conversation with your advisor can help clarify the best path forward, before anything is finalized.