Yahoo Finance Top 5 Reasons Americans Procrastinate on Doing Their Taxes
If you have yet to file your tax return, you're probably one of the 32% of Americans who procrastinate doing their taxes. People put off doing their taxes for a number of reasons, and a new IPX1031 survey shed some light on the top reasons why taxpayers wait until the last minute.
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See which pool of procrastinators you fall into.
It's Too Complicated/Stressful
The majority of tax procrastinators (33%) said they put off the process because it's too complicated or stressful. But ironically, putting off taxes until the last minute only adds to the stress of the process.
"I would argue the best way to mitigate some of that stress is to be thinking about your taxes more frequently than you are," said Eric Bronnenkant, head of tax at Betterment.
He recommends checking in on your tax liability throughout the year to make sure your withholdings are correct.
"Then when you go to file, it's less of a surprise on whether you're getting a refund or an amount due, as you've thought about this before the tax filing deadline," he said.
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It's Too Time Consuming
Twenty percent of procrastinators put off filing because they think it's too time-consuming -- but for many Americans, filing taxes can be a relatively quick process.
"If they just have one W-2 and they've only worked at one job and they're using some kind of commercial tax software, it could potentially take them less than a half an hour, depending on their situation," Bronnenkant said.
If you have a more complex tax situation, Bronnenkant recommends breaking up the process rather than trying to do everything all at once.
"Have a standard process where every time you get a new tax form, you put that into your tax software so that you're not waiting until the last minute and you've got a stack of documents that you need to sort through," he said.
I'm Not Getting a Refund
Some taxpayers who procrastinate filing (18%) said they put it off because they know they're not getting a refund, so they feel less motivated to get it done.
"Ironically enough, if you are getting a refund, you shouldn't be as stressed because even if you file a month late, there is no interest and penalties if you don't owe any money," Bronnenkant said. "If you do expect to owe money, then you do want to make sure that that is filed and paid by April 18. If you're not fully ready to file, then file for an extension, but still pay the amount that you expect to owe at that time."
I Want To Make Sure It's Correct
Fourteen percent of tax procrastinators say they wait until the last minute because they want to make sure their return is correct. This may be because they believe one of the forms they received is incorrect, or because they are waiting for a third party to check over the forms.
Bronnenkant notes that if you are waiting for a corrected form, you may be better off filing now and then filing an amended return later.
"I suggest people file as soon as they're ready to," he said. "Filing an amended tax return is not the end of the world. Within the last couple of years, the IRS has rolled out electronic amending of tax returns, too. Filing as soon as possible and getting your refund out means reducing the risk that a fraudster could file on your behalf and claim your refund before you file your return."
As for whether or not you should utilize a tax professional to ensure your tax return is correct, Bronnenkant said that this is largely a personal choice.
"If most of your income is on a W-2 and you have some bank interest, you should be able to handle that on your own," he said. "But if you are working in multiple states or if you moved from one state to another, or if you have stock options, those are some examples of things where I feel like having a tax professional can help prevent you from making a significant error."
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I'm Worried I'll Owe Money
Some tax procrastinators (12%) put off the process because they don't want to face the reality that they may owe money to the IRS. This can be stressful, but if it turns out that you do owe money and you are unable to pay, it's likely that you can work out a payment plan with the IRS to pay what you owe over time.
"The IRS' goal is to collect money from taxpayers, and if you are actively working with them trying to solve an issue, that's better than just not doing anything at all," Bronnenkant said.
It's important to note that putting off filing taxes and requesting an extension does not mean you have more time to pay what you owe the IRS -- it's simply an extension to file.
"If you think that you owe money, you would want to pay that with your extension," Bronnenkant said. "An extension to file is not an extension to pay."
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All survey data is sourced from IPX1031's "Tax Day 2023: America's Biggest Procrastinators" survey.
This article originally appeared on GOBankingRates.com: Top 5 Reasons Americans Procrastinate on Doing Their Taxes
