This year, the tax season opened on January 27th and will last until April 15th. Initial reports from the Internal Revenue System (IRS) show that this tax season is off to a sluggish start. After its first week, the IRS received 15.77 million individual income tax returns, 1.6 percent lower than 2019’s 16.04 million and 14 percent lower than 2018’s 18.32 million.
With almost two months left to file taxes, the slow start isn’t that big of a deal. According to the IRS, 20 to 25 percent of American taxpayers wait until the last two weeks before the deadline to prepare and submit their tax returns.
What are people waiting for?
Last-minute or late tax filing happens every tax season, with so many reasons being thrown around for why it happens. Some of them are:
Independent contractors are susceptible to this because they have to prepare and file their taxes on their own, unlike those who are employed and whose taxes are taken care of by their company and the help of firms like Tri-merit.com.
Some people intend to file their taxes sooner than later, but with all the goings-on in their lives, it slips their mind. Unfortunately, the IRS doesn’t look at this as a valid reason for not filing taxes.
This is a common reason for late or non-filing of taxes and it’s easy to see why. Unlike failing to pay your utilities or phone bill, there’s no immediate consequence for filing your taxes late. That is why a lot of people neglect this task.
However, the justification for the last one isn’t exactly true. When you wait until the last minute to pay your taxes, you’re likely to suffer the following consequences:
1. You’ll have less time to prepare your tax bill
Preparing and filing your taxes isn’t a quick process. If you’re an independent contractor, you’d have to prepare a year’s worth of documents and information to complete your tax return. If you do this last-minute and you find you’re missing vital documents, you might miss the deadline completely. What’s more, your tax bill may be way bigger than what you thought you owed. Waiting until the last minute will short change you on time to come up with the funds or a payment plan.
2. You are at greater risk of identity theft
Every year, the IRS pays out billions of dollars in fraudulent tax refunds because identity thieves used someone else’s name and information to file for tax returns early. If you file early, you’re protecting yourself from identity theft and helping the government fight these scams.
3. You’ll be paying penalties
Perhaps the biggest drawback of filing your taxes past the deadline is the penalty you’re going to have to pay. The late-filing penalty is usually 5 percent of the amount of the unpaid taxes you owe for each month that you’re late. That rate can go up to 25 percent the longer you wait unless you request for an extension.
If you’re waiting to file your income tax return, reconsider your decision. It can be taxing—pun intended—to stress about this when you can do something about it. Take a load off your shoulders and manage your tax bill as soon as possible.