I've already explained why you should file early, and if not early, then as soon as you are able. There are countless benefits like giving yourself more time to plan and protecting yourself from ID theft, but we've already discussed that. So, let's look at some excuses for why folks may not be filing their tax return. Over my 25 years in the tax business, I've heard many reasons for not filing a tax return until the last minute -- and not too many that are valid. Let me highlight a few of them and why they are wrong.
- You might owe money. Well, annually about 75 percent of taxpayers get a refund, so even if you think you owe, odds are in your favor that you will not. Currently, the IRS is averaging about 90 percent of filers getting a refund and the average Federal refund is almost $3,000. But suppose that is not you, and you do owe. If you file early, you still do NOT have to pay until April 15. So prepare your return now and file early, and if you owe, send in your balance due on April 15. All filing early does is let you know your balance due so you can better prepare to pay that amount when it comes due on April 15.
- You don't have all of your documents. By now, you should. If NOT, as with a W-2 Wage statement or 1099 for Dividend or Interest, you had better start calling your employer, because they were due to you by January 31. If you are still waiting on a K-1 from partnership or small corporation, you had better start asking about it. Filing an extension is only an extension of time to file the paperwork -- you will still need the K-1 data to prepare a valid tax estimate and extension.
- You wait to the last minute to file with the millions of others to reduce your chance of an IRS audit. Seriously, I hear this every year. It's laughable really. You would be better served to rub your tax return with a chicken bone and mumble magic words from Harry Potter. Filing last minute has no impact on audit risk.
- You like a thrill. Some people respond to "arousal procrastination." What does that mean? You like the thrill of a deadline. I'm not making this up. But I promise you, you will not like the thrill of rushing only to find out you missed deductions that could have put more money in your pocket. I see many errors caused by rushing to simply get it done at the last minute.
- You don't understand taxes. You're not alone. Not many people do. But that's why there's a lot of help available, starting with your local tax preparer.
I have many more but in the spirit of brevity I will stick with my top excuses above.
Finally, I would point out that the IRS has posted that they are still very much behind prior-year tax return filing volumes to date. They will catch up, and millions of taxpayers will file in the next 30 days. The reasons IRS volume is down are complicated and beyond the scope of this piece, but they range from an IRS delay at the start of tax season, late IRS forms just now coming out, to weather storms and other reasons.
Suffice it to say that in the next 30 days it is only going to get increasingly busy with millions of taxpayers filing, regardless how you plan to file your taxes. This does not even take into consideration the post April 15 IRS sequestration plans noted some weeks ago with possible layoffs, fiscal debt limit and impact on government with possible reduced services and other unknown developments that may hurt post April 15 extended filers.
Even for tax filers who file in those last few days, April 1-15, those tax returns may be impacted by IRS layoffs due to sequestration as they would likely be processed after April 15. Don't take chances with your tax return. File your taxes now. Get it done. Get that big refund, and go enjoy it.