If you’ve waited to file your taxes, you’re not alone. About 1 in 5 taxpayers wait until the last week to file their return, according to data from the IRS and tax-preparation software giant TurboTax.
But waiting until the end of tax season doesn’t have to mean long lines at the post office or a mad dash to fill out your forms. There are a bunch of tools that can help procrastinators make good with the tax man, even if they've waited until the last minute.
Foremost among them: Simply ask for more time.
All taxpayers can get an extra six months to file their taxes simply by asking for an extension using Form 4868. You can even file your extension request online using free software tools provided through IRS Free File.
Just keep in mind that an extension to file your taxes doesn’t absolve you from owed taxes by April 18; the extension merely applies to your paperwork, not your payment.
“A lot of people think that if they owe money and they file an extension, that’s an extension to pay their tax liability — and it’s not,” said Lisa Greene-Lewis, a CPA and tax expert for TurboTax.
Even if you file an extension, you must pay what your best estimate is of your tax bill. Otherwise, you will be charged a failure-to-pay penalty, which is generally 0.5% of your total tax bill for each month it goes unpaid, Greene-Lewis said.
Of course, if you’re logging on to file an extension online, why not just take a few more minutes to file your taxes?
Taxpayers making less than $62,000 can download tax-preparation software free from the IRS’s Free File portal. And those making over $62,000 can download free fillable online forms that help take the guesswork out of things.
These tools not only save time, but can prevent errors.
“You’re 20 times less likely to make a mistake when you e-file compared to filing a paper return,” the IRS writes in their Last-Minute Filing Tips. “That’s because the tax software catches and corrects common paper filing errors. It also will alert you to tax credits and deductions you may otherwise miss.”
If you’re waited until the last minute and aren’t using online tools, make sure you don’t rush it. In addition to mistakes or omissions making your tax bill higher than it has to be, errors also put you at higher risk of an audit by the IRS.
Some of the most common errors come from taxpayers forgetting about some forms they received or simply writing down the wrong numbers, raising red flags with the IRS when comparing your return with the information they have on file. So double check everything before filing.
If You Owe, Sometimes Later is Better
You obviously benefit from getting your refund check sooner. But those who owe a significant tax bill may actually want to put off filing their returns until the last possible moment.
Electronic payment processor ACI Worldwide has been a partner with the IRS since 1999, and it is used to the bulk of its tax payments coming through at the last minute.
“About 65% of our tax-season transactions come in during the last week up to the due date, and 30% of our transactions come in on the due date,” said Sheri Chin, vice president of marketing at ACI.
That kind of procrastination from people with an outstanding tax bill is understandable, she said.
“Why would you pay earlier than you need to pay?” Chin said.
On top of delaying payment until April 18, taxpayers can sometimes buy themselves even more time by paying with a credit card.
“You can charge your taxes when they are due, but you don’t have to actually pay them until the credit card comes due,” she said. “And besides being easy, fast and convenient to pay online, you can also earn miles and points or earn cash back. For some people, the equation really makes sense.”
Jeff Reeves is executive editor of InvestorPlace.com.
