Did you miss the April tax filing deadline again?!? Are you a procrastinator who gets an adrenaline rush from filing your taxes at 11:59 pm on the tax deadline date? Maybe you thought your taxes were too complicated or that you may owe money? No matter what the reason, this is it! You have one last chance to file your 2010 tax return by the extended deadline on October 17th and it doesn’t have to be difficult!
During my career as a CPA, I am always amazed by the amount of people who wait to file their taxes for these and other reasons when they may have a tax refund waiting. Even if they don’t have a refund coming, they rather risk increasing their tax liability by waiting to file their taxes.
Here are 7 good reasons why you should file before October 17th:
- You May Incur Additional Penalties, Late Fees, and Interest Charges by Missing the Deadline – After October 17th you will continue to incur additional penalties, late fees, and interest charges if you owe money. Remember, your extension was an extension of time to file and not an extension to pay.
- Filing Is Made Easy – Once you have your documents in order (and you should by now), using tax software like TurboTax makes filing your taxes easy by guiding you step-by-step through the process all while following IRS guidelines.
- E-filing Makes Filing Your Taxes Even Easier – Did you know that electronic filing of individual returns using consumer software like TurboTax continues to grow steadily at almost 12% per year? The IRS goal for e-filed returns in 2011 is 80% and they are almost there since they continue to support consumer tax software like TurboTax with e-file capability. So what are you waiting for? E-filing is easy and more accurate. Per the IRS, 20% of tax returns prepared on paper have mistakes, which may cause overpayment of taxes. If an error is made during the e-file process, the IRS will send an error report so that you can fix the problem and resubmit the tax return. You also will get your refund quicker. Per the IRS, if you e-file an accurate return, your refund check can be direct deposited into your account in 8 to 15 days after IRS acknowledgment and three weeks after acknowledgment if you chose to have a check mailed to you. If you paper file your tax return, you will have to wait up to six weeks from the date the IRS receives your tax return. And how will you know when the IRS receives your paper filed tax return? Good question. There is no way to know, but when you e-file you will receive an acknowledgment from the IRS which lets you know whether or not your e-filed return was received. For more information on the IRS refund cycle, please see our Where’s My Refund blog. Also, keep in mind that the IRS shuts off the ability to e-file your 2010 tax return after October 17th so you have to e-file before the deadline to take advantage of all the benefits. For more on e-filing also see our Avoid Post Office Lines blog.
- You May Miss Tax Deductions and Credits – Taxpayers often miss tax deductions and credits that they are entitled to because they don’t file their taxes or they are unaware of the tax deductions and credits available to them. There are also tax deductions and credits that are set to decrease or go away effective January 1, 2011. If you don’t file your tax return you may miss out on some of these tax savings. For instance, if you spent your hard earned money on energy efficient windows in 2010, but you don’t file your taxes you may miss out on the Residential Energy Credit, which for 2010 is 30% of your cost of eligible energy saving home improvements up to $1,500.
- You May Have a Refund Waiting – So you earned under $5,000 in 2010 and think it’s too little income to file taxes? Well, you may have a refund waiting for you once you file your tax return. Many taxpayers don’t realize that if you had taxes withheld from your wages then you should still file your taxes even if your income is below the filing requirement. Even if you didn’t have taxes withheld from your wages you may be eligible for Earned Income Credit and other refundable tax credits that may afford you that unexpected refund.
- If You Owe, the IRS Has Different Ways You Can Pay and Make Arrangements – Have you been procrastinating because you’re afraid of what you tax situation may look like? Don’t be afraid! First of all, your tax liability may not be as much as you think once you have been guided through all of the tax deductions and credits available to you. If you are unable to pay after all is said and done, the IRS has other options for you. You may be able to solve your debt through Installment Agreement, Temporary Delay, or an Offer and Compromise. You may also have the option to take part in the new IRS Fresh Start Initiative. The IRS is sensitive to what is occurring in peoples lives right now, but they just want you to at least file your return and make some type of arrangement with them.
- You’ve Had Six Months To Get Everything Together! – You should have all of your documents in order by now. That’s half the battle. If you don’t, you only have a little time left. Once your documents are in order everything should be easy with the help of TurboTax, where you will be guided step-by-step through preparing your taxes.