Filing Taxes This Late? It’ll Cost You — Double

in Financial Planning by

[dropcap]I[/dropcap]f you’re a serial procrastinator on tax filing, here’s a compelling new reason to consider changing your ways: According to a new survey, people who wait until the deadline end up paying twice as much in taxes and in general feel far less confident about their filing than people who get it done early.

People who file last-minute, or ask for an extension, pay an average of $163 in taxes, according to the survey of 1,100 people, which was prepared by TechBargains.com, a website that aggregates information about online deals. People who file in January or February, meanwhile, pay only $87 on average. Plus, if you’re in line for a refund, filing late means you’re going that much longer without that check — the average refund is now about $3,000, according to the IRS.

The IRS penalizes late filers in two ways: The first is a “late payment” penalty of 0.5 percent of your total taxes due every month (or part of a month) up to a maximum of 25 percent. Filing an extension won’t save you from having to pay a late payment fee. Then there’s the “late filing” penalty — 5 percent of the taxes you owe per month up to a maximum of 25 percent of the unpaid balance. That penalty kicks in after April 17 if you havent’ filed for an extension.

Even if you don’t have a tax accountant, there are plenty of inexpensive ways to get your taxes in shape on time. According to the survey, most people use their computers to file taxes. Only 2 percent use smartphones or tablets. Still, the most inexpensive way to file taxes is using tax prep software, which costs about $54, while filing through a website costs $60 and hiring an accountant costs $266.

Where are the most late filers? According to Turbo Tax, which compiles a list of the states with the most tax procrastinators, San Francisco wins the dubious award of having the most people who file at or near the tax deadline of April 15th (it’s April 17th this year). New York, Washington D.C., Los Angeles, and Seattle rounded out the top five.

People who wait to file do so because of laziness, or because they know they can get an extension, or know they aren’t owed any money, according to Turbo Tax. Although some may indeed enjoy the thrill of bumping up against the last minute.

The tax preparation software company reports that individuals tend to delay filing taxes for the following reasons: laziness, they know they can get an extension, they aren’t owed any money, and they enjoy the thrill of waiting until the last minute.

Related articles on tax planning on Daily Capital:

6 Ways to Get a Jump on Big Tax Changes Ahead

How to Avoid the Hidden Tax Hits of Mutual Funds

How to Get the Best Return on Your Tax Refund

 

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