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Last-minute Tax Tips for Procrastinators

With only 3 weeks left until the April 17 tax deadline, there isn’t any more time to procrastinate though.  Here are a few tips to help you get your maximum refund quickly, easily and, of course, with TurboTax

• Go online – It’s easy, convenient and fast. Many taxpayers can finish in less than an hour. And if you have a simple tax return, it may even be free. Go to turbotax.com to start today.

• ItsDeductible – Don’t forget charitable contributions. This includes cash and non-cash – household items such as clothing, electronics and toys that were donated. For those taxpayers that itemize, these donations can add up to tax savings. Mileage to and from charitable events, even babysitter fees while volunteering, can be deductible too.

• Sock it away – Contribute to an IRA. In the rush to file, don’t miss on opportunities to reduce that tax bill. Even procrastinators can save money on their taxes. You have until the April 17 deadline to contribute to an IRA and get a deduction on your 2011 tax return.

• Extend the deadline – Taxpayers that aren’t going to make the deadline need to file a tax extension, free with TurboTax. And remember: An extension to file isn’t an extension to pay. Taxes owed are still due April 17.

• File now – Even taxpayers that owe Uncle Sam, but don’t have the money,  should still file now and pay what they can.   The IRS has payment plans available.

Just try to walk into a post office on tax day and you’ll find a long line out the door of people who need to mail their tax return that day (and that’s even after many people have moved to electronic tax filing in 2011!). If you’ve already filed your taxes and you’re waiting on your tax refund, find out how to find your tax refund or visit the IRS “Where’s My Refund” tool to track your refund now.

Here are a few ideas on how to motivate yourself to get that return completed earlier:

Think Of The Refund

The average tax refund is around three thousand dollars according to the IRS, and that should be motivation enough to get your tax return completed as quickly as possible. Just think about all the useful things you can put that money towards. If you have some pesky credit card debt, use your refund to clear some or all of that away. Thinking about buying a house or car? That amount can go a long way towards getting the home or car of your dreams. If you’re due a refund, it makes absolute sense to process your return as quickly as possible. Think of the money you’re losing!

Get Organized

If you think there’s a lot of work to be done, it’s more likely that you’ll put it off until the very end. If you organize your tax documents as they come in, chances are your return won’t take as much time as you think. 1099-INT and W2 forms will arrive in mid to late February, so collate those as they come in because they will represent the vast majority of the paperwork you’ll need for your return. If you own a home, your bank will likely send that along with the 1099 forms. Once you get the forms, think back to the refund and get cracking on that return.

Don’t Do It All At Once

If you have a particularly pesky return that’ll take you several hours to complete, schedule an hour a day to put towards preparing your taxes. Hour one may be to collect all the documents you need. Hour two may be entering in that information. Hour three can be for answering all the other questions on the return. Hour four will be finishing up and reviewing your return. Break that out over four or five days and it’s less daunting of a task and one you’re more likely to completely.

Use Tools to Speed Up

Many tax preparation software packages will help you complete your return a lot faster than you think. So that initial estimate of four hours to complete your return may a vast over-estimate. Tax software, such as TurboTax, even import data, like W2 and 1099 information, directly from payroll processors and banks so that you won’t even need to enter that information. This type of integration is the future of tax preparation and it benefits you to take advantage of them. Also, if you use the same tax preparation software every year, much of your personal information will already be in the return.

Light the Competitive Fire

When it comes down to it, completing your taxes is a big game. It’s you vs. the government. You vs. the IRS. They would love to keep more of your money and the longer you wait, the longer they have it. That’s interest you are not earning. When you go to complete your taxes, approach it as you would any other competition. They set the rules, you have to beat them with it by getting the maximum refund you’re entitled to. Sometimes a little healthy competition is all you need to get you to action.

If all else fails, just think back to the first tip – think about your tax refund. If it takes you four hour to complete your return and you get the $3,000 average, you’re getting “paid” $750 an hour to do your taxes.

Laziness

(Evil Erin)

Sheer laziness is a common reason for late or non-filing, and a simple assessment of human nature makes it quite clear why. Unlike car payments or utilities (which trigger immediate consequences for falling behind), there are few if any explicit reminders to pay your income taxes. Put another way, April 15th can – and often does – pass without any visible friction or alarm if you neglected to file a return. The IRS does not send notices or agents to your home in the event that you do not file. Consequently, it is quite easy for a busy or careless person to put filing a return on the back burner amidst other responsibilities with more immediate consequences. Of course, this is not at all acceptable to the IRS. While you will not be discovered right away, make no mistake that you are being tracked in a backlog that someone will eventually see and investigate.

Forgetfulness

(Zoutedrop)

A similar but separate reason for filing late or not at all is forgetfulness. Whereas laziness involves being aware of the need to file and simply neglecting to put in the effort, forgetfulness is when someone “would have” filed, but claims that it just slipped their mind. TaxFables.com tells the story of Juan Ruiz, an owner of three Mexican restaurants who, “…explained that after his preparer gave him the return, he put it in his briefcase and then — just forgot it.” Plausible as such an excuse may sound, TaxFables concludes by stating, “…if you forget, don’t expect the IRS to forgive.” In short, forgetfulness is not a valid or accepted reason for filing late or not filing at all.

Confusion

(jakeliefer)

Another frequently stated excuse for not filing or filing late is confusion about the filing process. If you are an independent contractor, for instance, filing a tax return is significantly more complicated than filing as an employee. You are responsible for reporting income from the various people who pay you, claiming any deductions you feel you are justified in taking and (in most cases) doing all of this four times a year, rather than just once by April 15. Admittedly, the tax code can be quite confusing and difficult to deal with. The Tax Foundation, for instance, finds the net cost of tax compliance to individuals and businesses to be, “…roughly $275 billion and rising.” Again, however, confusion is no excuse for not filing or filing late as far as the IRS is concerned. It is expected that you will either research how to properly file or hire a professional who can do so on your behalf.

Death or Serious Illness of Taxpayer or Immediate Family

(tahitianlime)

It is quite understandable to delay the filing of a tax return for a death in one’s immediate family. Amidst the chaos and grieving that inevitably follows, the IRS grants some leniency in recognizing this as a legitimate reason for filing late. The same applies to serious illnesses, particularly those contracted by the taxpayer themselves. If you have a documented medical reason for being unable to file a return, the IRS will typically exempt you from fines or penalties connected to the late filing. That being said, the reason must be valid – do not do what Douglas D. Kemmerer did (according to TaxFables.com) and blame not filing ten years of returns on a convoluted disease like “tax phobia.”

Invalid Advice From a “Competent” Professional

(Dominic’s Pics)

Another oft-cited reason for not filing or for filing late is that you were advised toward that course of action by a professional, such as a tax preparer or attorney. Within certain limits, this is an excuse that the IRS will accept. Don’t interpret this too liberally, however. The IRS will not let you off the hook because your smart uncle advised that you did not have to file. Rather, they will investigate whether the person who gave you incorrect advice was a competent or licensed professional. Beyond that, they will likely investigate why a competent or licensed professional told you not to file a return when the law ultimately required you to.

Belief That Paying Income Taxes is Voluntary

(respres)

A long line of scam artists have persisted in spreading the myth that paying income taxes is voluntary or even a violation of Constitutional rights. TaxGuru.org offers a helpful rebuttal of these myths, including the notion that money is not income because it isn’t backed by gold and that income taxes only apply to federal government employees. Simply put, these ideas are incorrect. As TaxGuru points out, people have done serious jail time for failing to voluntarily pay their income taxes or file returns. While the IRS does its best to deter those who spread these myths, they display no leniency to those who fall for them, either. Attempts to justify late or non-filing using any of them can land you an, “…immediate $10,000 fine” plus whatever penalties already applied to your misdeeds, according to TaxGuru.org.

Active Duty Military Service

(Beverly & Pack)

Those who are deployed internationally in connection with active duty military service are eligible for extensions on filing their income tax returns. As eHow.com explains, “…if you were active in a combat zone, you are not required to submit any additional forms because the Department of Defense shares the names and social security numbers of service members who are deployed.” If in doubt, however, it never hurts to check to make certain that this exemption applies to you.

Destruction of Records

(Stephancanada01)

The IRS typically grants leniency to taxpayers who can prove that their tax or financial records were destroyed at the time they were needed to prepare their return. That is, if your house burns down in a tragic fire and takes your filing cabinet with it, you wont go to jail or pay penalties for not filing. That being said, people have been caught “staging” the destruction of their records to get out of paying before. If you attempt to claim this as an excuse, be prepared for the possibility that the IRS will want to confirm whether your records were destroyed accidentally or coincidentally, rather than intentionally. Police reports, photographs, and eye-witness testimony may all be helpful in demonstrating that the destruction was not caused by you.

Ignorance

(Orin Zebest)

Every year, late and non-filers claim ignorance of one form or another as the reason for their misdeed. However, ignorance of the law does not excuse anyone from responsibility for complying with it. Bankrate.com discusses several common excuses falling under the ignorance banner, including:

• “I was afraid to do it wrong, so I just kept gathering information and lost track of time.”
• “My husband refused to file, so I didn’t know what to do.”
• “I was drunk and totally out of it for the last few years. Hey, I was living on the streets. Do you think I cared about taxes?”

Needless to say, none of these excuses hold any weight with the IRS whatsoever. As a sovereign citizen, it is assumed that you will take responsibility for understanding your tax obligations and reporting them in a timely and lawful manner.

Unavailability of IRS Help

(cliff1066™)

If you can demonstrate that the IRS was not available to assist you in filing your return in a timely and lawful manner, this is a recognized and accepted excuse for late filing. Again – whether you can, in practice, escape punishment using this excuse depends on the specifics of what happened. In all likelihood, you will not be able to avoid punishment because you were put on hold for a long time or didn’t get to speak with the first IRS assistant you called. Rather, it will need to be clear that you made an active and reasonable effort to seek help and despite this, did not receive it. Be sure to document the times and dates of any attempted and failed correspondence with the IRS, including who you were attempting to reach and by what means (phone, e-mail, snail mail, etc.)

Incarceration

(Corey Leopold)

While we don’t suspect many of our readers will be incarcerated anytime soon, it does serve as a valid excuse for filing late or not filing, because you either did not have access to your financial records or became incarcerated late in the filing season. Then again, most prisoners also do not have any income to report in the first place, so perhaps it’s best to avoid jail altogether and simply file on time.