By Paul Scholz, Managing Partner
Every year we have many clients who ignore their taxes until the last possible moment. Sometimes its unavoidable, like when you are waiting on K-1 forms or other documents that are necessary to complete your taxes and you have no control over when you receive them. Often though, it’s simply a case of procrastination. For all you procrastinators out there I’ve put together the following list to encourage you to file your taxes early:
Top 10 reasons why NOT to wait until the last minute to file your income tax forms
- Because of increased electronic filing traffic, it has become common for major tax processing software firms to experience system problems and/or complete shutdowns on filing dates, leaving some taxpayers with late filing penalty problems.
- Often while preparing tax returns for clients we find some data has been omitted. “I never got that 1099” won’t fit on a tax form anywhere. If we need more info that must be tracked down and we discover this the day before its due, it means you’ll likely be filing late and may incur penalties.
- Our volume doubles every two weeks during a normal tax season. If you bring your information to us in late March and want to go over tax planning, we simply won’t have time to talk with you over coffee. The time for planning and strategizing is during the year when you are structuring transactions, not 3 months after the end of the year when we literally are running through the office with files and working long hours.
- Every year when we electronically file some tax forms we discover victims of identity theft – Someone has hijacked a Social Security Number and filed a false Tax Return. In that case you’ll need to obtain a PIN from IRS and likely file a paper version of your taxes with them. If you discover this late in the year when you file your taxes, who knows what else the fraudsters have done with your data while you were procrastinating. It will also delay filing of your tax returns a few weeks and may put you over the filing due date, causing late filing penalties.
- S***T happens. Your dependent child filed a return and claimed herself. Your W-2 was missing a state ID number. All kinds of things can cause an electronic filing to reject. Resolving them can take time and push past the due date and expose you to penalties.
- If you have a refund coming wouldn’t it be nice to have that money sooner?
- If you owe money wouldn’t it be nice to be able to budget ahead of time? Telling a client that they need to come up with a lot of money by tomorrow, is never a pleasant discussion.
- An extension of time to file is not an extension of time to pay. If you go on extension and ultimately owe more money, the taxes owed will have incurred penalties and interest for not having been paid on time.
- Electronic signatures are not fool proof. If your document isn’t signed correctly the signature won’t transmit. Waiting until the last minute to try and figure out how to E-sign a document risks getting penalized for a late filing.
- Lenders and sometimes government agencies request copies of your latest tax returns for loans and grant applications. If you show up in our office in early April needing your taxes done in 3 days to close the home loan you’ve been working on for over a month, be prepared for a large increase in your fees!
Been awhile since you filed your taxes, we can help! Can’t find your prior year tax documents or filed returns, you pull your history from the IRS website.