As we grow closer to tax time, I can fill the air thicken with anxiety. Oh joy, it’s the most wonderful time of the year. Well, maybe not, but it can be a great time to accomplish a required task. While the weather is dicey, it’s a good opportunity to do what is needed to organize documents for tax preparation.
The IRS has granted us a couple extra days to prepare our tax returns. That’s good news for those of you who were born with the procrastination bone. Due to Emancipation Day, a holiday observed in the District of Columbia, individual returns are now due on April 18th.
Sounds like a dream… a whole three extra days. While three extra days can really make difference, it shouldn’t when it comes to tax preparation. Here are three reasons why April 18th shouldn’t matter:
1. State Income Tax Returns
For those of you who live in states with an income tax, your due date has probably not changed. Most state income tax returns are still due April 15th. This includes those of us who live in Tennessee and pay the bizarre Tennessee income tax, which by the way is not really an income tax….it’s a dividend and interest tax. Fortunately, most Tennesseans are not impacted by this tax.
2. Procrastination is Painful
Remember when preparing your tax return you are dealing with last year’s data. This puts the focus on the prior year and makes it difficult to concentrate on planning for the current year. As a proponent of proactive tax planning, I feel it is never too early to plan. Waiting too long (starting late in the year) to plan and manage your current tax liability is dangerous. As the year moves deeper into the calendar, the ability to make meaningful changes becomes more difficult.
3. It’s Just too Late
Dealing with tax returns in the 11th hour is a gamble. If additional information is needed to complete the return, little time is available. Rushed tax work is usually not good tax work. While most tax preparers are true professionals, a long arduous tax season could possibly spur late season complacency and possible errors.
April 18th shouldn’t matter when it comes to your tax return. Set a goal and complete this task in March. For some of you this will be a big challenge, but it’s worth the effort. You might even find yourself sleeping a bit better as a result!