There are many reasons why millions of taxpayers procrastinate when it comes to submitting their annual returns. Much of the time, those excuses aren't good.
But there are some times when you shouldn't rush to finish your Form 1040 early in the filing season, even if you're expecting a tax refund.
Here are six reasons to wait a bit before filing:
1. To get your return right.
Doing your taxes is bad enough, even if you use tax software or pay a tax professional to do the task. You sure don't want to do them twice. That could happen if you get in too big a hurry to file. If you discover a mistake on a return, such as overlooking some income or a deduction, you'll need to correct that with an amended filing (Form 1040X) as soon as you discover it.
The Internal Revenue Service is likely to find the mistake, too. When that finally happens, if you owe more tax then you'll also have been running up under-payment penalties and interest charges.
2. To get a better grip on the new tax law.
The Tax Cuts and Jobs Act (TCJA) was enacted on Dec. 22, 2017. That means the 2018 tax year was the first under the most extensive tax reform in more than 30 years. And a lot of the changes are complicated. Yes, I'm looking at you Section 199A small business tax deduction.
Even the relatively simple TCJA changes, like the new child tax credit or expanded standard deduction amounts, will require you to take a closer look at how these revisions affect your tax situation and prior filing routine.
Plus, the forms have been changed to reflect the new tax laws. Millions of filers will find that the form that they used to use is no longer available. There's now just one Form 1040 and six new schedules from which to choose and use depending on your personal tax circumstances.
3. To make sure you have all your tax statements.
If the only data you need to file is from your job's Form W-2, then you probably can (and should) file as soon as you can. But a lot of folks get a lot more tax statements that have information necessary to properly fill out a tax return.
Yes, most of these documents, were supposed to at least be in the mail (snail or electronic) by Jan. 31. But some issuers are slow. Or your U.S. Postal Service branch or carrier has issues. Or the document went into your junk/spam box and you didn't check before you deleted everything.
Give those third-party form issuers a few more days. If you haven't gotten them by the middle of the month, then contact them and get a copy. You need that info because the IRS gets a copy of these statements. Agency workers will flag your return if it doesn't match the information that the IRS got via the statements but that you didn't report.
Some documents also aren't issued for a while. This is the case with K-1 forms issued for partnerships, LLCs and S corporations, which don't have to be sent until March 15. If you need a K-1 to file, there's no way to do so until you get it. Doing so before then means you'll have to amend your return, which as noted in #1 is a pain.
4. To make sure you have all other tax information.
Formal tax statements are issued in many cases, but not all. For example, 1099-MISC forms for contract work you did as full-time job or to supplement your regular salaried work don't have to be issued if your total pay was less than $600.
You being an honest taxpayer, however, still need to report that $599 your neighbors paid you for taking those great photos of their son's first birthday party. Check your records to make sure you report all of this type of income.
Also double check that you have all the details on potential tax breaks, such as medical expenses if you're still itemizing and claiming these costs. Or the expenses you paid for the care of your young children so you could work. You need these amounts — as well as the caregiver's tax identification number — to claim the child and dependent care credit.
Again, if you find such income or expenses after you file, well, you know the drill.
5. To ensure you understand your return.
I know, most of us just want the filing over with ASAP. I get it.
The hubby and I have been married for a long time, during which I've always done our taxes. And every year when I tell him what I've done as far as our 1040, he wants to brush it off with a "I trust you." I'm glad he does, but I still insist he at least fake listening to my explanations.
It's important that he know what's on the return because when all of us taxpayers sign our 1040s, either with a real John Hancock or an electronic signature, we all are attesting to the return's accuracy.
That's true even if you paid a tax preparer to do the job. The ultimate legal responsibility is yours. And if like the hubby and I you file a joint return, the tax responsibility is on both of you, even when one spouse did the actual filling out of the forms.
So if you have questions about why a deduction was or wasn't claimed or how come your tax bill was bigger this year than last, ask. Ask your tax preparing spouse. Ask your tax professional. And ask until it's totally clear.
6. To give yourself time to take another look.
I've been a professional writer my whole adult (and a bit before) life. Much of that time, I've been writing about taxes.
Over the years, I've discovered that writing and filing taxes have something in common. Often, as soon as you're done, you see something you want to change.
It's relatively easy to edit a story or blog post. Just call your editor or open your blog publishing tool and make the changes. It's not so easy with taxes (that darn amended return again).
So after you do your return, take a break. Step back and go on about the rest of your life. Then come back to your return and look it over. Fresh eyes often make a mistake you missed in your original filling out of your tax forms seem amazing obvious, either in your copy or on your 1040.
How, you wonder, did you miss that the first time around? You were in the tax forest and all those trees overloaded with tax provisions were obscured. Give yourself a chance and the time needed to see every single tax leaf, er, break or proper entry.
Don't miss the April due date: The above six reasons discuss why you shouldn't be in a big tax filing hurry.
However, they in no way advocate that you miss the April filing deadline, of which there are two this year — April 15 of 17 — depending on where you live.
Take as much time as you need to file your taxes completely and accurately. Just do it within the filing due date parameters. Get your return or at least an extension filed (and pay and taxes due, by the April due date(s).
If you don't and then file a return late, that's a whole other set of problems … and another tax blog post!
You also might find these items of interest:
- 6 reasons to file your taxes early
- 2018 tax return checklist and Schedule A review
- Free File 2019 is open with taxpayer protection upgrades