Filing taxes is hardly an enjoyable process, but if you put it off too long, you might regret that decision later on. And this year, it's especially crucial that you get moving on your taxes. Changes to the tax code could make filing your return more difficult this season than in years past, so even if you've historically done your own taxes, you might end up needing some help this time around.
In fact, roughly 65% of filers think that it will take more time to complete their tax returns this year, according to Jackson Hewitt, and the reason very much boils down to tax reform. Ironically, one of the goals of the 2018 tax overhaul was to simplify the tax code. The reality, however, is that this season, a large number of filers will inevitably find themselves more confused than ever.
"Even with tax reform and select elements of simplification, taxes are still the mirror of our complex and diverse society," says Mark Steber, chief tax officer at Jackson Hewitt. "The array of deductions, credits, and tax benefits that apply uniquely to one taxpayer may not apply to the next. Knowing how to navigate the complex tax system to find all those deductions and credits requires significant training, experience, and in many cases, technology."
In other words, get moving on your taxes well before the deadline. Otherwise, you risk missing it and paying the price after the fact.
Don't be late with your taxes
Is submitting a tax return after the deadline really such a big deal? If you owe the IRS taxes, it could be. That's because you'll face a failure to file penalty equaling 5% of your unpaid tax bill for every month or partial month your return is late, up to 25% of your unpaid tax bill, if you don't submit your return by the April 15 deadline. Furthermore, if you don't pay your tax bill in full by the deadline, you'll face a late payment penalty equal to 0.5% of your unpaid taxes per month or partial month they go unpaid, up to a total of 25%. Ouch.
Now one way to avoid the failure to file penalty is to request a tax extension. That will buy you an extra six months to submit your return to the IRS. It won't, however, help you avoid accruing interest for paying your tax bill late -- your actual tax bill will still be due by the April 15 deadline even after your extension is granted.
If you're due a refund from the IRS this year, you won't be directly penalized for submitting your tax return after the deadline. What you will do, however, is delay that refund, and while the IRS won't mind hanging onto your money even longer, you might start to miss it.
Of course, if your tax return is fairly simple, you might find that it doesn't take much longer than usual to get it done with. But if your taxes are more complex -- say, you own a small business or have multiple sources of income -- it pays to prepare for a longer filing process. And that's why you shouldn't procrastinate on your taxes this year. Like it or not, the tax code is actually more complicated than ever, so leave yourself extra time to complete your return -- or find a professional to do it for you.