Don't Mess With Taxes

Taking things a bit more slowly often is a good idea. For many, that applies to filing their annual tax return. (Photo by Kay Bell)

Few people like doing taxes, even when doing so will get them a refund. That’s every year, some people who are due money back from Uncle Sam still put off finishing their taxes.

But there are other reasons in addition to plain procrastination to wait to file your taxes.

Here are five.

1. To allow for all your tax statements to arrive. We’re almost at the Jan. 31 deadline that most tax statement providers must meet. But even though it’s the law, some won’t make that deadline. I just checked with one of my 1099 issuers, and was told I could download it, “Next week. Probably.” So, I’m waiting.

The reality is that some third-party reporting document issuers also are procrastinators. Their statements trickle in later than they should. It’s frustrating, especially is that one document is all that’s standing in your filing way, but you need to wait.

If enter what you think will be on the form on your Form 1040, and it turns out to be different from what’s on the final, officially issued statement, the Internal Revenue Service will notice. And it will delay processing of your return, and issuing any due refund, until the amounts are reconciled.

You'll need even more filing patience if you get any of the tax documents that aren't on the Jan. 31 issuance schedule. In fact, these usually aren't distributed until well into the filing season or even beyond, such as the K-1 form sent to partnerships, LLCs, and S corporations. They don't have to be issued until March 15. If you need a K-1 to file, there's no way to do so until you get it.

2. To ensure you have all other tax information. Those formal tax statements you should get by the end of this week are just part of your filing information. Sometimes in order to report your accurate earnings amounts, you'll need to check all your financial records, such as bank accounts or online payment apps.

For example, you got some 1099-NEC forms for gigs you picked up to supplement your main wages. These forms were sent to you because you earned $600 or more.

Then there were the sales you made of your handcrafted dishware through an internet marketplace. If your pottery was popular enough to bring in more than $5,000 last year, you should get a Form 1099-K. But you want to make sure that the amount on that form doesn’t inadvertently include amounts that are exempt from the shifting, and still sometimes confusing, 1099-K reporting rules.

Even if your earnings weren’t enough to trigger reporting statements, you still are legally required to report those amounts on your return. A check of your bank statements, for example, could job your memory of that $599 your neighbor paid you for the new shelf you handmade to fit the awkward space in his garage. Your complete records also will help you claim all the allowable expenses that can reduce the tax you owe on these entrepreneurial earnings.

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.

3. To give you time to find a tax professional. If this is the year that you decide you just can’t with your own taxes any longer, even using tax software, then definitely hire reputable tax help. Since we're just at the beginning of the annual tax season, you have some time to find the tax professional that fits your needs.

But by starting that tax preparer search now, you pretty much guarantee that your Form 1040 will be filed later. Tax pros currently are working with clients who came to them well before filing season started, so you're going to the end of the line. Your new tax adviser might even recommend getting a filing extension. But at least you realized you needed professional tax help early, and are in the system.

4. To make sure you understand your return. I know, most of us just want our tax return filing over with, regardless of whether we’re getting a refund or must pay. And a lot of people are interested only in that bottom line. They don’t care how it was achieved. But you should care about what’s on your Form 1040 and why.

The reason? You, the taxpayer signing the return, either via pen on a paper form or with an electronic signature, are attesting to its accuracy. That places any legal ramification for the return's entries squarely on you, the taxpayer, and your spouse, too, if you’re filing jointly.

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 or anything else on your 1040, ask.

Ask your tax software's help option if that's how you're doing your taxes. Ask your tax-preparing spouse or other relative doing you a filing favor. Ask the tax professional you hired.

And ask and ask and ask until it's totally clear. When you’re satisfied with the answer, only then sign your return and file it.

5. To get your filing right the first time. All of this post's previous four filing procrastination situations ultimately lead to one conclusion. Once is enough when it comes to doing your taxes.

If you're too eager to file your return, you might have to do it again because in your rush you didn't include necessary information or made a mistake. Sure, amending a tax return is not that difficult, especially since the 1040-X now can be done electrically. But really? You want to do this all twice?

If you also file states taxes, which most U.S. taxpayers do, the potential for mistakes doubles, since most state returns rely on entries from your federal filing. When that duplicated data is wrong, you'll have to re-do that state tax return, too.

But by letting your original federal tax return sit there a bit before you file it, you'll give yourself time to take another look. A pause and follow-up with fresh eyes often makes a mistake suddenly seem amazing obvious.

So take all the time you need to file completely and correctly. That's when you have all the info you need. Or when your confident you understand what's on your 1040. Or when you can get a spot on your tax pro's schedule.

And if that right tax filing time is later, that's fine.

You also might find these items of interest:

• Do you have to file a tax return? Probably
• 10 reasons to file your tax year return early
• Questions to ask, and answer, before you tackle your 1040

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