You may officially file your taxes. Despite early reports that tax season would be delayed this year, open filing for businesses and individuals is up and running, right on time. If you customarily wait until the last minute on April 15th to file your taxes, this news may not seem all that important. However, 2014 tax filing is going to be a little different from previous years: the IRS is overwhelmed and understaffed, for starters, meaning less assistance for you and potentially longer return processing times. But that’s not all.
This is the first year that health care reporting will be integrated into your tax return, which means a small but significant extra step for you. If you have questions about any of this, you have a 50% chance of getting someone from the IRS on the phone (again, they’re understaffed) and you’re expected to keep the conversation short if you do. With all of these minor complications, it may be tempting to put off filing for as long as you can. Before you hit the snooze button on your tax prep, though, consider what procrastinating can mean for you this year. Stalling on your taxes can easily set off a disturbing chain of events.
As with most things, what you put off until tomorrow can quickly become what you put off until next week, or the week after that. Meanwhile, thousands of other Americans are getting their returns out of the way to get their refunds, or start sizing up their debts. The more people standing on line with the IRS, returns in hand, means a longer wait for you; extended hold times with the IRS, more time sitting in your tax preparer’s office and likely a longer period before you see any refund. If you’re creeping into April before you file, what happens if you suddenly realize you owe, with less than two weeks to pay?
There are plenty of reasons why you might potentially owe the IRS this season, many of which you probably haven’t considered. Did you have enough withheld in taxes during 2014? Were there bonuses, side work, or a bump in pay that pushed you into the next tax bracket? Did you have a debt forgiven, win at the slots, or get a payout from a lawsuit? If you’re not thinking about filing your taxes, it’s a safe bet you haven’t thought about potential liabilities. In the event that you realize at the eleventh hour that you owe something, you can file an extension to pay. This won’t excuse you from having to pay a late penalty and any associated interest, and it doesn’t solve the more immediate problem: not only are you not going to get a refund, but now you owe the IRS money. If this is a new experience for you, you may be inclined to push your luck and see if you can get away with skipping it altogether.
If you’ve never had a tax debt before, there is never a good time to start. Should you decide to tempt fate, though, there are a couple of things to be aware of: when the IRS assesses what you owe, determining that back taxes are due, you’ll be provided a notice to pay immediately (the enclosed sum will include any mounting penalties and interest). If you disregard the IRS’ notices, you open yourself up to more aggressive collection action; liens, wage garnishments, bank levies and even property seizures are all at the government’s disposal. Meanwhile, your original balance can more than double after only a few years of neglect.
You don’t have to endure the ultimate nightmare with the IRS if you simply plan ahead. If you know you’re going to need a little more time to file, whatever the reason, at least have a look at your W2’s and 1099’s. This will give you an idea of what, if anything, you may owe. And if you need the help of a professional tax preparer, you can schedule an appointment well in advance. Even if you do have to pay in the end – or wind up with a tax debt – a licensed tax professional can keep you from having sleepless nights. On the other hand, if you get an early start, you’ll know exactly what to expect. When it comes to dealing with the IRS, the last thing you want are surprises.