While most Americans (74%) plan to file their taxes early, there are still a fair number of tax procrastinators, a recent GOBankingRates survey found. Fourteen percent of Americans plan to file the week of Tax Day, 7% plan to file on Tax Day and 6% plan to ask for an extension.
Federal taxes are typically due on April 15 each year, and you might be tempted to wait until the last minute to file. But putting off filing your taxes may not be the best decision. Here are all the reasons why you shouldn’t procrastinate on this yearly chore.
Something Might Come Up Closer to Tax Day
“If you wait until the last minute, you’re risking that something will come up that will put you in a bind to make the deadline, like an unexpected illness or a project at work that demands your time,” said Stephen Henley, CPA, senior managing director at CBIZ MHM. “This just amplifies your stress level.”
If You End Up Missing the Deadline, It Will Cost You
If you do wait too long and miss the deadline, you’ll get hit with penalties.
The “failure to file” penalty is 5% of unpaid taxes for each month that your return is late. The failure to file penalty maxes out once you reach 25% of your unpaid taxes, but if you still haven’t paid your taxes, you’ll be hit with an additional failure to pay penalty.
Your Accountant Will Be Less Busy
“If you start early, you get accountants before they become tired,” said Tatiana Tsoir, CPA and founder of Linza Advisors. “The truth is that we are all people and can make mistakes. If you come to us early, you may get the accountant to pay a little more attention to your business and what can be done better next year.”
You’ll Have More Time To Double-Check Your Return
It can be easy to forget about a deduction when putting together your tax return. If you start working on it early, you’ll have more time to review it and correct information if needed to ensure you get all the deductions you’re entitled to.
In addition to missing out on deductions, you’re more likely to make errors if you’re in a rush.
“If a mistake is made on your return when you file, that oversite could result in an audit or an unexpected, large tax bill,” said Mark Jaeger, VP of tax operations at TaxAct. “Mistakes can happen, but it’s important to be as careful as possible.”
Filing Early Helps Protect You From Tax Fraud
A favorite scheme of fraudsters is to file a tax return using your identity and then make off with your refund check. But they can’t do this if you’ve already filed your return. Therefore, the longer you wait to file, the longer you leave yourself vulnerable to criminals.
Procrastinating Means You’ll Lose Out on Interest If You Are Owed a Refund
“A refund is simply money you earned throughout the previous year and, unfortunately, the IRS held onto it interest-free,” Jaeger said. “Getting that money back as quickly as possible will give you more opportunity to invest it in a retirement or investment account and make that money work for your financial benefit.”
The earlier you invest your refund or put it into a high-interest-earnings savings vehicle, the more interest you will earn on it over time.
Survey methodology: GOBankingRates surveyed 1,005 Americans ages 18 and older from across the country between Jan. 23 and Jan. 26, 2024, asking 14 different questions: (1) How do you plan on filing your taxes this year?; (2) When do you expect to file your taxes this year?; (3) How much do you expect to receive in a tax refund?; (4) What do you plan to do with your refund?; (5) Do you feel confident you are receiving all the deductions you feel qualified for?; (6) Do you believe your tax dollars are being spent effectively?; (7) Do you believe you are paying too much, too little or a fair share in taxes?; (8) Have you ever been audited before?; (9) Who will/would use your tax dollars the best?; (10) How much is the standard deduction for a single filer (and married filers) in 2024?; (11) What concerns you the most about Tax Day?; (12) Do you expect your tax refund this year to be more or less than last year?; (13) What do you understand the least about your taxes?; and (14) What would you rather be doing than your taxes? (Select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
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