15 Reasons Not to File Taxes Last Minute

by David@MoneyNing.com · 35 comments

The deadline for filing estimated tax payments passed a month ago, but one of my readers still doesn’t know if she made the correct payment yet. Why? The government.

Oh the government… When I made my estimated payment online through their system, it says that the submission went through just fine. As it’s my first time doing it electronically, I even called their hotline and spoke to a representative who told me not to worry as everything looked good.

A week later, I got a letter saying the payment was dishonored with no reason why. It even said that there may be penalties accessed. It did give me a way to rectify the problem by sending another check though. I called the hotline again, but the person on the other line wasn’t able to tell me why the payment did not go through. She just told me “to send a check”.

I sent payment according to instructions on the letter and called again after I saw the check cashed. All the representative told me was that it takes up to 45 days for the payment to be processed and recorded and for me to sit tight. When I asked her what happens if it was someone else who cashed the check instead, she asked me not to stop payment and to sit tight. Her final advice was to “keep checking back”.

One month later, I’m still waiting. I hope I don’t get penalties for what’s not my fault.

It may be hard to believe but she is actually LUCKY because she managed to get someone on the phone. I’ve heard countless tearful stories of those who couldn’t get ahold of anybody on the other line because everything is shutdown.

The number 1 reason why you shouldn’t file taxes last minute – you just cannot trust the government’s efficiency.

Here are 14 more:

  1. Possible Penalties – Whoever is at fault, they could still charge you interest for anything you owe. It may not be fair but that’s just how it goes.
  2. Refund – Most people get a refund, so if you don’t file as soon as possible, you are giving out an interest free loan.
  3. Changes to Your Accounts After You Do Your Taxes – After you file your taxes, you might find that you can make changes to contributions to your 401k or IRA accounts. It could be that you find out you can contribute more to stay under a certain tax bracket. Or, if you are ineligible for Roth IRA contribution but you added funds this year anyway, then you need to undo the transaction. Filing last minute might not give you the necessary time to make these changes.
  4. Hard to Come Up with Payment – If you find out that you owe money, you have no time to come up with payment if you file last minute.
  5. You May Underestimate the Time it Takes to File – Did you get married, bought a house or change jobs last year? These events could make your taxes much more complicated. Filing taxes doesn’t always take 15 minutes.
  6. Not All Tax Forms May Be Available – It’s much easier these days with all tax forms available online, but which ones do you need and how do you fill them out? Are you really sure you know exactly what’s needed and that they will be available at your fingertips when you need it urgently?
  7. You Could Need More Information – You almost never have all the documents ready when you file your taxes. It would really suck when it’s 3 hours before the deadline and you have to find your accountant to reprint your W2.
  8. Post Offices May Close On Time – It’s pretty funny when people expect the post office to open late just so they can postmark their mail before the deadline. Don’t expect someone to work late just because you are lazy.
  9. Your Computer May Crash – Most of us can probably relate to working on something when the computer all of a sudden crashes. All saved work is gone. Forever. (True story: I even had to redo something 4 times before because my computer kept crashing.)
  10. You Forgot You Changed Computers – Many people change laptops but never remember that their old tax information is in the old one. When you file your taxes last minute, expect a mad scramble.
  11. The Laptop That Has All Your Information is at Work – Actually, it was at your previous work laptop since you changed jobs. You may get a pass this year since you’ve been working at home for so long but don’t let this be you next year!
  12. Unexpected Things Happen – You may get sick or some emergency may come up. Don’t be sipping on medicine and trying to punch in all the numbers in your calculator at the same time.
  13. Printing The Stupid Return – My tax accountant told me that in the old days, she had customers that spend 2 hours just printing the tax returns on inkjet printers. Can you imagine the stress level at 10:00 pm on tax day if they were printing their return?
  14. You Overpay for Advice – Whether it’s Taxcut, TurboTax or your accountant, expect to pay extra for last minute advice. When you are in a time crunch, there’s no time to figure out how to get the best deal for the expertise.

But David… Isn’t it a little too late to tell me I shouldn’t be filing taxes last minute?

Fair point! Many procrastinators will be kicking things into high gear –a.k.a. panicking — to gather their paperwork in time right about now. If that’s you, I won’t scold you for failing to file your taxes earlier. Instead, here are four tips to help you fly in your usual style.

1. File for an extension.

If you can’t get yourself in gear by the 18th, there’s always the option to file for a six-month extension by the same deadline. The downside is that if you owe the government money, then you’re still responsible for paying the estimated taxes when you file for the extension. In other words, it’s an extension for filing your taxes, not paying what you owe.

What if you can’t pay now? Failing to file for an extension will result in a penalty on top of the bill you already can’t pay. Even though it seems like the IRS’s policies are harsh, they do offer the option to set up an installment plan (for a fee, of course). You can do this online if you owe less than $50,000.

2. Make last-minute donations to retirement accounts to lower the tax bill.

One surprising way to make your tax bill less painful is a last-minute IRA contribution (why not pay yourself rather than the government?). You might wonder how that works since you’re filing last year’s tax information. Well, the IRS allows you to designate retirement contributions for the previous year until the tax filing due date of the following year. Maxing out your IRA contribution limit for the previous year could save you upwards of $1,000 on your tax bill (of course, the earlier you contribute the funds, the longer they’ll be earning you interest. To get a head start on next year, automate your contributions and plan to max out).

3. File your taxes online.

Filing online is faster and easier, especially if you’re running late. If you’ve never filed your own taxes online before, a quick search will lead you to various tax prep businesses that offer free e-file along with paid services (like having your return reviewed by a tax professional). And, if your gross earnings fell under $64,000, you can use the IRS Free File Program.

E-filing requires an electronic pin you’ll use for e-signing; also, don’t forget to save digital and print copies of your taxes for your files.

4. Watch for hasty mistakes.

You’re more likely to make mistakes since you’re in a hurry to meet the deadline. The following mistakes are common – and costly – in more ways than one:

  • Missed deductions. You might overlook important credits and deductions you qualify for (student loan interest, charitable contributions, home office, etc.) that could either lower your taxable income, reduce your tax bill, or earn you a heftier refund.
  • Bad account numbers or Social Security numbers. This mistake is especially regretful because it could mean someone else getting your refund, gaining access to your sensitive information, or even stealing your identity.
  • Missing signature and date. Your tax return must be dated and signed to be considered complete. Don’t let this simple mistake cost you.

Even though there are more ways to reduce your tax bill before the end of the tax year, and it’s almost always better to file your taxes early, these four tips can get you to and through Tax Day in better financial shape despite your perpetual procrastination.

So, tax day is quickly approaching this year. Have you filed your taxes yet?

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{ read the comments below or add one }

  • j says:

    I guess I’m in trouble, I haven’t filed for 17 years! 🙂

  • Richwood7 says:

    Number 3 “you’re making an interest free loan to the government” is the stupidest one of all. If you are getting back $50,000 maybe that is true but say it is $5,000. That means you have averaged $2,500 over the year. At 5% interest (trying finding that now!) it means you have lost out on (drum roll here)…..$125! Now assume you are in the paying 20% in marginal tax rate so you pay $25 of that back to the government. Now you have $100 or less than $1.00 a week. Compare that to getting $5,000 back and using it to pay property taxes, a vacation, buying 100 shares of a $50 stock. I used to use mine to pay my property taxes.

    • Ed says:

      What is wrong with this? 1. You are telling us that you do not have the discipline to put the money aside during the year. 2. Your math is wrong – $100/50 = $2. 3. There is no 20% marginal tax rate; they are 10, 15, 25, 28, etc. 4. The interest rate for this quarter is 3% and the same for the 1st quarter of 2011. The 2 middle quarters – 4%. In the past, it has been as high as 10% (it is adjusted every qtr)

  • Jamie says:

    I gotta say guys – I hate filling in tax forms 🙂

  • Jeremy Wood says:

    IRS –

    Last year, I filed my taxes along with the $8000 first time home buyer credit on Feb 3rd. I got my tax refund in August and the homebuyer credit in November… they added $120 in interest payments. Over the course of those 9 months, I called the IRS at least twice a month( the people on the phone dont have much information) and even wrote my Representative in the House twice. I just kept getting a letter saying “We are still reviewing and you will hear back in 30 days”. ~30 days later the same letter would come….

    Filing early doesn’t always help. my next door nightbor filed in April and got it back in 4 weeks…

  • Jared says:

    The IRS offers a free service called VITA (Volunteer Income Tax Assistance). If you make under a certain amount you could qualify to have your taxes done for free by a volunteer certified through the IRS.

    Check out: http://www.irs.gov/individuals/article/0,,id=219171,00.html to get a list of the closest site to you.

  • Pumbaa says:

    I got an e-mail from a Limited Partnership. I only have about $6000 worth of its “units/shares” and they said my tax information would be posted on their website by April 7th.. So how am I supposed to be able to file my income taxes early when the government lets the LP wait until after the first of April to send me the tax statements?

  • Greg @ HeaterHut says:

    The depressing thing is how excited people get over their tax return check at all.. Yay. The government held on to all of this extra money of mine for months, interest free, and were kind enough to send it back to me months later. Let’s go buy a TV with it.

  • Glenn says:

    I couldn’t find any state forms one year, so I tore a sheet of loose-leaf paper out of a notebook, and treated it as a tax form. I used a friend’s copy of her state return as a guide. Name, address and SSN at top, listed only those line numbers for which there was an entry, signed it, and mailed it in. I included an explanation (“Couldn’t find a form anywhere, but I know the line numbers for which there are entries. Sorry for the inconvenience.”) I also requested that my refund check be mailed to a different address, as I was moving. Nine (9) days later my refund check was in the mailbox at my new address more than 300 miles away.

    Tip: If you owe penalties and interest as a result of a mistake made by a paid preparer, the paid preparer is required to reimburse you for the penalties and interest attributable to his/her/its mistake. Some (i.e., few) paid preparers will tell you this, but often in a way that makes it sound like they’re offering an amenity. It isn’t an amenity–they’re required by law to foot the bill.

    Also, if you’re consistently receiving large refunds year after year, you can legally adjust your withholding allowances so less money is withheld each paycheck. Interest-free loans to the gov’t are not required. OTOH, a rationale can be found for just about anything, and some people prefer making those interest-free loans, as they figure they’d otherwise piddle away the extra money in their paychecks, so they see large refunds as a kind of ‘forced’ savings.

  • SP says:

    DJ, that’s silly. The majority of Americans get refunds on their federal tax returns, and e-filed returns are processed in approximately 2 to 3 weeks. People aren’t going to wait until 4/15 to file when they can have their refunds by 2/15. The IRS does have 45 days from the return due date of 4/15 to process refund returns interest-free. If you file after 4/15, the IRS has 45 days from the date you file to process refund returns interest-free. The post office has nothing to do with the tax code, so why are you throwing them into the mix? And above all else, remember back to your high school civics class: the IRS doesn’t write the tax code, Congress does. Yes, it should be simplified, so write your congressman.

  • dj says:

    I always prepare my paper tax returns (never electronic) well ahead of time and mail them at the very last minute. Why? Because, if we all did that…every single one of us file our returns on April 15…the Post Office and the IRS are crushed beneath a wave of 50 million or so tax returns and MAYBE then the code would be revised to be easy and sane and uniform. I believe that the IRS has to service the return by a certain number of days and that will not happen if we all file on April 15.

  • OneDamnAngryAmerican says:

    Always do things their way. Dot all of your “ayes” and cross all your “t’s.” Never do anything that confuses a government employee. They are all trained monkeys with no common sense, no initiative, and people who do NOT get paid for COMPETANCE. Their supervisors train them that 2+2 is 4. So, if you complete a form with a 3+1 on it, you get flagged and spend the next 5 years of your life having a pen-pal at the IRS (who was never trained that 3+1 is 4, regardless of the proof you provide them) and, another one with your health insurance company for the coronary you will most likely suffer from the morons the IRS employs. Or, do they actually fit the personnel standards to a “T” for their job description? Duh?

  • Jorge says:

    Well this year I e-filed on April 14; on the 15th my Internet connection went bad… both up and down links. Whew.

  • James @ Electric Heaters says:

    Life teaches you that is NEVER a good idea to put anything off until the last minute. Playing Russian Roulette with your tax return is exceptionally dangerous. It’s just not worth the risk 🙂

  • GMnVA says:

    Why not follow the fine example of our political leadership and their staffs and give us 15 reasons not to file taxes at all. Oh yeah, I forgot, the little people who must live by the law are not above it like those write the law. If Bob wanted to do some real investigative work he would already have cultivated an IRS insider and the list of politicians and their staffs who don’t pay taxes would be in the headlines instead of the quotations from his new book about the President.

  • Bryan Culwick says:

    I have for some years made my estimated tax payments by direct debit to my checking account. The IRS ‘phone access is amazingly swift and efficient, they don’t request constant verification of data entries as do so many other sites . A final review is all that is required and the process takes less than 3 minutes. I contrast NC online tax payment which is so laborious that I file by mail.

  • Matt says:

    It seems like there are penalties for everything. Is there a penalty if the IRS owes you money because you didn’t send in a tax return form? I have other issues such as inter-state income (I moved) and have to pay income taxes in my state of origin, so I will have to have somebody licensed do my taxes for me, but I cannot help but wonder. I worked at Old Navy and they never gave my last pay check so I never filed taxes for it in hopes that the IRS would investigate them and I’d get my last pay check. It’s pretty bad when you work from Dec 18 thru christmas and then dont even get paid for it. All I got from it now is a headache wondering if I will go to jail for not filing taxes. Technically I did not make enough to have to file taxes, but I tend to get screwed over a lot.

  • Elder says:

    Suffice it to say that unless your taxes are very straightforward, procrastination does not pay.

  • Brian Jefferies says:

    Great Advice. Thanks 🙂

  • Wren says:

    For all you California residents, your refund may not be in the mail…. See Jane Stark’s post This Just In… California to pay debts with Monopoly money

  • Wise Finish says:

    One reason might be that your tax preparation software doesn’t work exactly as you might expect and it takes you a lot longer to do your taxes than you thought. Waiting until the last minute for anything in life is usually not something that will benefit you (unless you are “sniping” an eBay auction)…

  • Win Free Stuff says:

    Best thing is do not file your taxes and move to China to start a business >: ) You will never have to pay taxes unless you bring a lot of money into USA.


    • smugexpat says:

      This is NOT true if you are an American citizen; we are required to pay taxes on worldwide income. I live in China; there is a tax treaty between China and the USA, so we can deduct the amount of taxes we pay to China from the amount that we should pay to the US. As China has a top tax rate for expats of 40% [on amounts over 100K RMB/month, if I recall correctly], we generally end up paying so much to China that we don’t owe anything to the US. We still file, though.

  • PennySeeds.com says:

    45 days to verify a payment? Only the government could get away with that kind of customer service. Honestly, efiling my taxes takes only a few minutes. Unless you’re a business with lots of paperwork, and write offs I can’t see why you should need to spend a generous amount of time (or cash) to get your taxes done.

    • Vazir Mukhtar says:

      You might want to factor in age as reason to have someone else, a CPA who specializes in taxes, for example, file your returns. Now this isn’t to say “Blow a wad on having your taxes done,” but some of us who remember when FDR was president still have the smarts to make money but lack what it takes to use TurboTax or one of the other computerized tax forms.

  • Neal Frankle says:

    DUDE…You are so right.

    Many years ago, I had a huge issue like this. Shortly before I was going on a long trip, I sent the IRS my payments but I did it using two different checks because I didn’t have enough funds in one account. The genius at the IRS applied one check for the current year and decided to take the other check and apply it for the next year. Needless to say, I was underpaid for that current year. To make matters worse, they sent me nasty letters but they sent them to an address that did not exist on this planet so I never got the letters. By the time I found out about the problem they had assessed penalties and wouldn’t make it right. I ended up having to pay those penalties or suffer a nervous breakdown. YIKES….

  • Hedy@penny for my tyoughts says:

    Re #3, if you’re getting a refund, hasn’t the “giving the government a free interest loan” chicken already flown the coop, whether you file now or in April?

  • Jules @ Lovely Las Vegas says:

    Hehe. I better get started on those taxes. I have all my paperwork organized and spreadsheets created for the year, but thanks for the reminder to just get on with it and get the filing of the taxes done : ).

  • Liz says:

    When you show up at an H&R Block at the last moment (like I did last year) you may find the best tax preparers have already gone on vacation and they’ll assign an inexperienced or incompetent person to do your taxes.

    Last year I did my taxes around April 13. When I got home I discovered the tax preparer (an accountant with a Master’s degree) had made a couple of gross mistakes which thank God I caught but then I had to return to amend my return.

    Perhaps she was overworked and stressed from all the last minute filers and that didn’t help either but the bottom line is: Don’t wait til the last minute.


  • tom says:

    Excellent points, when things can go wrong, they will.

    Although there still will be people that will file last minute but oh well we can only convince so many to file early.

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