Yes, tax returns are due in less than a month. But who’s got the time to deal with that?
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Certainly not Bob Meighan, vice president at TurboTax. He’s too busy dealing with tax season to actually fill in his own forms. “There’s a chance I’ll file by April 18″ when returns are due this year, he says. “I’m a procrastinator.” He often files an extension and slips his taxes in on the last possible day, with extensions, which is October 17 this year.
Steve Lower, an engineering designer at Pennsylvania State University, isn’t going to be filing particularly early, either. He knows he should be collecting all of his data and toting the receipts from his wife’s business, but there’s that spring weather and the motorcycle to ride. And then there’s the financial issue. ”It takes money to file the taxes, and that’s the main reason I’m holding off,” he says. Lower’s not even talking about the tax bill that’s due on April 18, he’s talking about the money he’ll spend to buy tax prep software and file the forms. He expects a refund, but if he has a balance due, he’ll definitely wait until the last possible minute, he said. Why rush?
Last-minute filing is a big, popular deal. News crews regularly set up at post offices to catch the midnight madness. Every year the Lawrence, Kansas, post office holds a procrastinators’ party, complete with balloons and a live band, for the folks who still race to mail in their paper returns. Filers like Lower have found some tax websites, including TurboTax’s, jammed and slow at the midnight hour of the last filing day. Meighan says his firm has built the site to accommodate the biggest spike of the year and more last-minute filers than usual.
Roughly 27% of all Americans will probably wait until the last two weeks of tax season to file their returns, TurboTax estimates. That figure has gone up; it was more traditionally about 20% of tax filers. If you’re one of them, here are five points to consider (ideally, sooner rather than later):
* You can file now and pay later. It’s good to finish your return early, just in case you have to scrape up extra cash for Uncle Sam. But you can file your return any time between now and April 18 at midnight, and still not make your payment until the bitter end. You can do that by mailing in a check with a voucher, or by filing electronically and authorizing the IRS to dip into your bank account on April 18.
* Or you can file later and pay now. You can, of course, file an extension and not have to finish your forms until mid-October. But that doesn’t excuse you from making your expected tax payment by April 18. If you file an extension but fail to pay enough in taxes, you’ll end up paying interest and a $75 late payment penalty to the IRS.
* You may be right. There isn’t any compelling reason to file early, and waiting until the last minute allows you time to review your return and make sure you’re capturing all the credits and deductions you’re due. And not paying the IRS a moment too soon.
* You may be dysfunctional. Roughly 20% of people aren’t delaying for strategic reasons; they’re holding off because they have have a “maladaptive way of life,” says Joseph Ferrari, a professor of psychology at DePaul University and author of “Still Procrastinating? The No-Regrets Guide To Getting it Done.”
Ferrari says that habitual procrastinators have deep psychological issues that cause them to put everything off. “They aren’t only going to do their taxes late, they probably don’t have a will either. They’ll RSVP late and wait until the gauge goes to empty before they buy gas for their car.” Says Ferrari: “They need therapy, that’s the bottom line.”
* You may suffer too long. If the thought of filing your tax return hangs over you all season, you may want to get it done early so you can forget about it and move on. Then you can live like Lower’s 26-year-old son. ”He jumps all over it,” says the elder. And now he’s on a two-week vacation in California, all paid for by the tax refund he got early.