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| Eight reasons you're right to dread your taxes this April | Eight reasons you're right to dread your taxes this April |
| (5 months later) | |
| No one in America likes doing their taxes – except our colleague Emma Brockes, who calls it "time travel for the soul". For the rest of us earthbound mortals, the rule is procrastination. And you know what? That's perfectly natural and in, some cases, even justified. | |
| Here's why you're absolutely right to dread your taxes. | Here's why you're absolutely right to dread your taxes. |
| 1. You have no idea whether you owe money | 1. You have no idea whether you owe money |
| The problem with taxes is that it's impossible to get an estimate. You fill out your documents, send them off and hope you don't get whopped with a giant bill. This tends to cause people to put off the pain. | |
| "A lot of people determine when to file based on whether or not they are getting money back or whether or not they have to pay it out," says Lindsey Buchholz, principal research analyst at H&R Block. | "A lot of people determine when to file based on whether or not they are getting money back or whether or not they have to pay it out," says Lindsey Buchholz, principal research analyst at H&R Block. |
| The general rule of thought is that if you are getting money back, people usually file earlier so that they can get the money faster. And if they owe, they kind of try to push it off as long as possible." | The general rule of thought is that if you are getting money back, people usually file earlier so that they can get the money faster. And if they owe, they kind of try to push it off as long as possible." |
| The majority of people do expect to get money back from the IRS: about 73% of refund returns are received before 1 April. To help these early filers track the progress of their refund, IRS has launched "Where is my refund?" site. In the first three months of 2013, the web site has logged 8.7m requests, says the IRS. | The majority of people do expect to get money back from the IRS: about 73% of refund returns are received before 1 April. To help these early filers track the progress of their refund, IRS has launched "Where is my refund?" site. In the first three months of 2013, the web site has logged 8.7m requests, says the IRS. |
| The money owed to the government, however, begins to roll in later than that. According to the IRS, the agency receives about 61% of the balance-due returns after 15 April, the filing deadline. That's a bad idea, by the way – if you hated the idea of paying your tax bill, it's going to be even worse with penalties. | The money owed to the government, however, begins to roll in later than that. According to the IRS, the agency receives about 61% of the balance-due returns after 15 April, the filing deadline. That's a bad idea, by the way – if you hated the idea of paying your tax bill, it's going to be even worse with penalties. |
| 2. You don't have any money lying around to pay the IRS | 2. You don't have any money lying around to pay the IRS |
| For some Americans, tax avoidance boils to something much more simpler: fear. | For some Americans, tax avoidance boils to something much more simpler: fear. |
| While some people are just overwhelmed by the process, some are genuinely afraid of not being able to pay their tax bill. Take Mr V, interviewed by the New York Times, who hasn’t filed his taxes in more than 30 years now. | While some people are just overwhelmed by the process, some are genuinely afraid of not being able to pay their tax bill. Take Mr V, interviewed by the New York Times, who hasn’t filed his taxes in more than 30 years now. |
| I have theories, but none have helped me get past the fear of filing and doing it on time. I rationalize. I think I’m just a small guy and the IRS wouldn’t be interested in me. I do intend to file.” | I have theories, but none have helped me get past the fear of filing and doing it on time. I rationalize. I think I’m just a small guy and the IRS wouldn’t be interested in me. I do intend to file.” |
| For those Americans, who are afraid of not being able to pay, not filing is a pretty bad way to handle it. The amount they owe is only going to increase. | For those Americans, who are afraid of not being able to pay, not filing is a pretty bad way to handle it. The amount they owe is only going to increase. |
| 3. The IRS wants you to go into debt to pay your taxes | 3. The IRS wants you to go into debt to pay your taxes |
| If you do owe money to the IRS, and you can't immediately afford it, you're likely to go into debt. | If you do owe money to the IRS, and you can't immediately afford it, you're likely to go into debt. |
| The IRS's own advice to those who owe it money include some unsavory options: instalment agreement, paying it off with a credit card, or even taking out a loan from a bank. In fact, the agency prefers that you go into debt rather than make instalment payments. Their advice is as follows: | The IRS's own advice to those who owe it money include some unsavory options: instalment agreement, paying it off with a credit card, or even taking out a loan from a bank. In fact, the agency prefers that you go into debt rather than make instalment payments. Their advice is as follows: |
| It turns out that the IRS charges the kind of interest that would make a bank blush. | It turns out that the IRS charges the kind of interest that would make a bank blush. |
| “The penalty for filing late is normally 5% of the unpaid taxes for each month or part of a month that a tax return is late," according to the IRS. "That penalty starts accruing the day after the tax filing due date." | “The penalty for filing late is normally 5% of the unpaid taxes for each month or part of a month that a tax return is late," according to the IRS. "That penalty starts accruing the day after the tax filing due date." |
| Here's how the math works: not paying your taxes comes to 6% per year, according to Gail Rosen, a CPA in New Jersey. That comes from a 3% failure-to-pay penalty, calculated at .25% times 12 months, plus 3% interest, Rosen calculates. | |
| "My opinion is that it depends on where elsewhere you can go for a loan," she says. "A credit card can be more expensive." The trouble with the instalment payments is that not everyone qualifies: you have to be current with all your tax returns and payments, according to Buchholz. | "My opinion is that it depends on where elsewhere you can go for a loan," she says. "A credit card can be more expensive." The trouble with the instalment payments is that not everyone qualifies: you have to be current with all your tax returns and payments, according to Buchholz. |
| There is yet another option: short-term extension. The short-term 120 day extension can be requested from the IRS, with no application fee – but the IRS would keep counting the failure-to-pay penalty and interest against you during the extension. | |
| 4. You're disorganized | 4. You're disorganized |
| We've all been there. You know you have that 1099, you just don't know where. | We've all been there. You know you have that 1099, you just don't know where. |
| One of the main reasons that people tend to put off filing their taxes till the last minute can be attributed to the amount of paperwork that they have to compile. There are the W-2s, the 1099s, possible receipts for deduction, maybe a letter about your college loans or tuition. | One of the main reasons that people tend to put off filing their taxes till the last minute can be attributed to the amount of paperwork that they have to compile. There are the W-2s, the 1099s, possible receipts for deduction, maybe a letter about your college loans or tuition. |
| "If you have a lot of documents that you have to get together, you may end up waiting longer because it takes you longer to get organized," says Buchholz. | "If you have a lot of documents that you have to get together, you may end up waiting longer because it takes you longer to get organized," says Buchholz. |
| The best way to avoid this is to designate some part of your house or apartment a dumping ground for all things IRS-related. Some people use a shoebox; others use a drawer. Others have perfectly matched file folders. Either way, resolve from now to keep things together. | The best way to avoid this is to designate some part of your house or apartment a dumping ground for all things IRS-related. Some people use a shoebox; others use a drawer. Others have perfectly matched file folders. Either way, resolve from now to keep things together. |
| And remember: if it's a lost cause, you can always request your tax documents from the IRS itself, including your W-2 information for the past 10 years. You can also ask your employer, or former employer, to run off another copy for you. | And remember: if it's a lost cause, you can always request your tax documents from the IRS itself, including your W-2 information for the past 10 years. You can also ask your employer, or former employer, to run off another copy for you. |
| 5. Genetics won't let you finish your taxes | 5. Genetics won't let you finish your taxes |
| Rather than blaming stray W-2s or 1099s, some Americans can now blame their genetics. A recent study revealed that procrastination was hereditary in about half of the study’s subjects. For the other half, it comes back to nature versus nurture, as the study also found that those leading busy stressful lives tend to procrastinate as well. In some cases, procrastination was a result of influences of friends. | Rather than blaming stray W-2s or 1099s, some Americans can now blame their genetics. A recent study revealed that procrastination was hereditary in about half of the study’s subjects. For the other half, it comes back to nature versus nurture, as the study also found that those leading busy stressful lives tend to procrastinate as well. In some cases, procrastination was a result of influences of friends. |
| "I’m too busy, I’ll get to it later" will only get you so far. For most, that means scrambling to file come April. About 20% of Americans wait until the week before the deadline to file their taxes, says the IRS. In 2012, the number of the Americans filing at the last minute was 27.1 million. | "I’m too busy, I’ll get to it later" will only get you so far. For most, that means scrambling to file come April. About 20% of Americans wait until the week before the deadline to file their taxes, says the IRS. In 2012, the number of the Americans filing at the last minute was 27.1 million. |
| 6. It really is complicated | 6. It really is complicated |
| The current 1040 form – the main tax form filed by most Americans – has 77 line items as well as a 189-page appendix of instructions, reports Quartz. | The current 1040 form – the main tax form filed by most Americans – has 77 line items as well as a 189-page appendix of instructions, reports Quartz. |
| In just the last 20 years, the length of the form has increased 21%, up from 65 lines in 1991." | In just the last 20 years, the length of the form has increased 21%, up from 65 lines in 1991." |
| Urgh. | Urgh. |
| 7. It takes too much time and costs money, too | 7. It takes too much time and costs money, too |
| “The IRS says it takes an average of four hours just to complete and submit a Form 1040. Add at least another hour if you also have to complete a state return," says John Ams, executive vice-president at the National Society of Accountants. | “The IRS says it takes an average of four hours just to complete and submit a Form 1040. Add at least another hour if you also have to complete a state return," says John Ams, executive vice-president at the National Society of Accountants. |
| You have to ask, ‘How much is your time worth?’ Plus I haven’t met many people who enjoy preparing their taxes, so hiring a professional to prepare your tax return can take a very unpleasant task off your plate. That’s worth something. | You have to ask, ‘How much is your time worth?’ Plus I haven’t met many people who enjoy preparing their taxes, so hiring a professional to prepare your tax return can take a very unpleasant task off your plate. That’s worth something. |
| Ams adds that if the accountant catches just one deduction or credit that you might have missed, that might cover his fee. To get a professional to file their 2013 1040 and a state tax return, Americans are looking at a bill of about $261. | Ams adds that if the accountant catches just one deduction or credit that you might have missed, that might cover his fee. To get a professional to file their 2013 1040 and a state tax return, Americans are looking at a bill of about $261. |
| 8. You don't think taxes are fair | 8. You don't think taxes are fair |
| Join the club. You don't need to be an Idaho anti-society survivalist to resent the big hit from taxes. | Join the club. You don't need to be an Idaho anti-society survivalist to resent the big hit from taxes. |
| Last year, 55% as Americans described their tax rate as fair. That's lowest since 2001, according to Gallup. It appears that this sentiment is shared by rich and poor alike. | Last year, 55% as Americans described their tax rate as fair. That's lowest since 2001, according to Gallup. It appears that this sentiment is shared by rich and poor alike. |
| Perceptions of income tax fairness, perhaps surprisingly, vary little by household income level. Fifty-seven percent of those whose annual household income level is below $75,000 say their taxes are fair, as do 54% of those whose income is $75,000 or above. | Perceptions of income tax fairness, perhaps surprisingly, vary little by household income level. Fifty-seven percent of those whose annual household income level is below $75,000 say their taxes are fair, as do 54% of those whose income is $75,000 or above. |
| The biggest difference, of course, was based on political affiliation. While just 32% of Democrats described their taxes as not fair, for Republicans that number was 48%. | The biggest difference, of course, was based on political affiliation. While just 32% of Democrats described their taxes as not fair, for Republicans that number was 48%. |
| What we want to know is who – besides Warren Buffett – made up the 2% of Americans that described their taxes as too low. Seriously. | What we want to know is who – besides Warren Buffett – made up the 2% of Americans that described their taxes as too low. Seriously. |
| One good thing to remember, however, when things get dark, is that our taxes pay for things like national parks. Picture yourself writing that tax check to Old Faithful. | One good thing to remember, however, when things get dark, is that our taxes pay for things like national parks. Picture yourself writing that tax check to Old Faithful. |
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