April 15 is Tax Day. It’s the day by which the IRS requires those who owe taxes to file and pay taxes. It’s also well dreaded by every procrastinator during this time of year.
While there is an option to request an extension to file by October 15, 2013, here are three good reasons why you shouldn’t.
Reason #1: You pay interest on any owed taxes, even if you extend
If you owe taxes to the IRS and file for an extension, the IRS will still calculate interest on your outstanding balance.
That’s because a tax extension is meant to give you extra time to prepare a completely accurate tax return, but the IRS will not wait around to receive the taxes you owe.
To avoid these penalties and interest payments, it’s best to pay in full as soon as you can, preferably by April 15.
Reason #2: Filing as soon as possible protects you from identity theft
If you’re due a refund and extend, you won’t have to worry about any late payment interest or penalties. But waiting to claim your refund could expose you to a rapidly growing problem: identity theft.
According to the IRS, identity theft cases involving stolen Social Security numbers to collect other people’s tax refunds soared to 449,809 in 2012, up more than 80% from the previous year. Taxpayers usually don’t realize their identities have been stolen until they try to file and their return is rejected by the IRS.
Bottom line: The longer you wait to file, the more time identity thieves have to steal your refund.
Reason #3: Procrastinating can lead to more procrastination
It can be easy to push things off and say you’ll do it later, but you should avoid procrastinating on something as important as taxes. By avoiding filing your taxes you put yourself at risk of losing paperwork, paying late payment fees, or forgetting to do it at all.
In fact, each year the IRS has millions of unclaimed tax refunds that expire by April 15 and this year is no different. The IRS recently announced that they have $917 million dollars in unclaimed refunds for tax year 2009, and unless claimed by April 15, 2013, the money becomes property of the U.S. Treasury.
Still not sure if filing an extension is a good idea or not? Next week, we’ll share our thoughts on situations when filing an extension is recommended.
In the meantime, get your tax documents in line, and send us any questions via our contact form.