It’s almost the last day of tax day and some people have yet to start gathering their documents for the filing of tax returns. According to survey, 20 percent of Americans wait until April to file their tax returns. Tax experts will tell you, though, that it’s not a good idea to wait until the last month to file tax returns.
Tax season started last January and ends in April 18 this year. The last day is usually every 15th of the month but this year the deadline is on a Saturday. Then Monday happens to be the celebration of the Emancipation Day, considering the actual event falls on a Sunday. This means that this year is among the longest time to file a tax return. There shouldn’t be any more reason for anyone to fail to file on time. However, people will always find an excuse to file anything close to deadline.
Here are reasons why you should not wait until April to file tax returns:
There are some changes in the tax rules as implemented by the Internal Revenue Service (IRS). Majority of the population is not updated with the latest changes in the tax rules. This is why it is advisable that you prepare your documentations as early as possible. This way, there will be ample time for you or your accountant to adjust your tax returns based on the new rules.
Go to your accountant as soon as possible. He or she is probably more adept at the new tax rules. For you to avoid costly mistakes, let the accountant help you in filing the tax return. Accountants are generally expensive during this season, but sometimes it is more practical to hire one than to scrimp on getting a professional and risk paying a penalty or a higher are. If you can find an accountant friend, he might be willing to work on your numbers in exchange for dinner. Or you can hire an accounting undergraduate. This way, you will get your tax calculations at a cheap rate while at the same time allowing the undergraduate to have a practical experience in his chose field.
Get refund faster
The earlier you file your tax return, the earlier you may get your tax refund. It doesn’t take a rocket scientist to figure this one out. The IRS is expected to release refunds within 21 days. So if you really need the money, file your return as soon as you can.
Lower risk of identity theft
Cases of identity theft are widely increasing primarily because of tax refunds. Criminals are stealing identities in order to get the tax refund. So if you file your tax return early, this means there will be no identity to steal in support of a tax refund.
But with just a few days to go before the turn of April, thousands of Americans have yet to file their income tax returns. So rather than being all preachy about the importance of filing tax returns early, we might as well share some effective tips for those who procrastinate in filing their tax returns.
Here are some of them:
1. Watch out for scammers
As mentioned, the identity thieves come out in droves during tax season. Identity theft is the number one cause of tax fraud. So if you are expecting a big refund, you should be more vigilant about scammers. One way to protect yourself from them is through credit monitoring system. You may enroll yourself into a 24-hour seven-days-a-week monitoring program to ensure that your credit information has not been misused. On your end, especially if you don’t want to pay extra, you should at least be careful in using your information in public.
One way to protect your details is to watch when your credit card is swiped in the machine. One way that identity theft is done is also through a similar machine that copies your details the way that a credit card machine processes your information. There are of course reputable stores where you can be sure that your details are safe. But for the other side—smaller stores—it is best that you just follow the person manning your credit card and make sure that you see the card being swiped through.
2. Prepare all paperwork
The main reason taxpayers procrastinate is because they can’t find the time to file their tax returns immediately. If you have to procrastinate, though, start working on your documentation in January. You can at least do one thing every few days just so you don’t have to cram in the last days until deadline. Mistakes are prone to be committed when one is in a hurry. Here are the basic and more important materials that you need to prepare: Social Security card, income statements, past tax returns, health coverage statement and bank account information.
3. Consider being audited
In most cases, only those large accounts are audited. But the advantage of thinking that you’d be audited, no matter how small your tax return might be, is that your paperwork is always tops. The thing is, when your documentation is not meticulously prepared, you might be liable for some expensive mistakes. These mistakes can be avoided. If you prepare your tax returns with the intent of being audited, chances are you won’t be audited. The IRS usually goes after taxpayers whose tax returns are not as straight as they should be.
4. Make a plan
This may sound silly considering that you don’t have much time, but then, you have to make time in making a plan in order to file a tax return. Spending extra time creating a plan will actually help you save time in the long run. Write down all the documents you need to turn over and enumerate the procedural steps in filing the return. Meeting with an accountant should be part of the plan since this is an important step in making sure you file your tax return right.
5. File online
If you have a simple tax return then it’s better to just file it online. It’s going to be simple and quick. The IRS also has a free file system that offers online software that can calculate tax payments for free. However, the software is only for free for a certain pay grade. But if you don’t fall within the free category, there are other free online tax software programs.
First-time filers may also enjoy a free software that can help them go over their taxes. Just make sure it is actually free because there are times that hidden charges are imposed.
6. Don’t fear your bill
One of the reasons why people dilly-dally on the filing of the tax returns is the stress involved in figuring it out. Some people, as soon as they realize the probable tax they will be paying, will freak out. They can’t function properly anymore. Be proactive and set up payment schemes that will work well for you. This way, you won’t just be obsessing about numbers; you are actually paying most of it. As for your tax bill, there are myriad of ways in order to pay this including installment basis.
7. Start on the next tax return
As soon as you are done paying your tax due or filing a tax return, it’s actually a good time to start preparing for the next one. The advantage of this is that you already have a technical know-how on how to process tax returns. The great thing about preparing early is that everything is still fresh from your mind. You will already have an idea on what forms are needed and how to fill out some of these sheets, which could hasten your work the next time around.
8. File an extension
It’s actually okay to be late filing the tax return as long as you are on time in paying your tax due. But you have to ask permission or at least inform the IRS that you will need extra time to file your return. You can have as much as six months to file your return. This way, you don’t have to haphazardly submit documents that may lead to an expensive mistake. The important thing is you are able to estimate your tax due.
But again, as much as possible, don’t be among the procrastinators. Remember the adage: Early bird catches the worms. In this case, those who file their tax returns early may be treated to an early tax refund. Just remember that your tax return is your responsibility. Whether you will file the tax return yourself or hire an expert to do it for you, you should be hands-on. You should know how your tax due came to be. Don’t just sit around and wait for the experts to formulate your tax due because this will now be an annual event for you. Uncle Sam doesn’t have a leap year when it comes to collecting taxes. So when you learn the ropes, you have to carry it with you.