Cents and Sensibility

You Should Maybe Do Your Taxes. MAYBE.

I’m a bad, bad girl. As I write this, I have a giant platter of sushi in front of me and some red bean mochi ice cream waiting in the freezer. I’m breaking my diet and budget restrictions, but it’s the only way I can bribe myself into doing my taxes.

Doing taxes are just the worst. It’s time-consuming and involves a lot of paper, which is only a fun situation if you are either scrap-booking or playing Monopoly. Tax returns and any money owed are due April 17 this year. That’s still two months away; however, this might be the optimal time to do your taxes. MAYBE.

There are some distinct advantages to doing your taxes early:

  • In the process of getting your documents together, you may realize that you are missing a few forms or receipts. If you get started early, you will have ample time to gather what you need and file before the due date.
  • If you are entitled to a refund, I’m sure you want that money now. One year, I filed my state tax return a full month after my siblings did. And because of California’s budget crisis, they received their check in a timely manner, whereas I received an IOU and a promise that I’d get my refund by July. That’s not to say this will happen to you, but I definitely filed my taxes earlier going forward.
  • If you owe money this year, it’s probably best that you find out now in case you need to make accommodations. Heaven forbid you file at the last minute only to realize you have to cough up a couple hundred dollars that you don’t have.
  • If you need tax preparation services, you can take advantage of some great early-bird deals. As you can imagine, tax preparers get slammed in the last few weeks leading up to Tax Day, and they offer incentives for people who can file early to lighten their load.

I would, however, warn against rushing your tax return:

  • Before you file, make sure that you have all your documents and receipts. Employers and businesses had to mail out their tax documents by January 31. So if you haven’t received your W-2, 1099, or whatever forms you need by now, you should start calling around to find out how to get them.
  • Rushing your taxes can also cause you to make a mistake. If the mistake is in the favor of the IRS, you will lose out on your refund. If the mistake is in your favor, chances are slim that you will be subject to an audit. However, you may still receive an automated message from the IRS telling you to check your math. That’s already annoying enough coming from your junior high algebra teacher. I can only imagine that it’s worse coming from the IRS.
  • To make changes to your income, filing status, or deductions you have to submit an amended return. You can read more about it here, but sufficed to say it’s pretty tedious, it takes up to 12 weeks to process, and you should aim to do it right the first time.

So when should you do your taxes? If you only have to do the basic tax stuff (your W-2s and nothing more) gather your documents and head to your tax preparer. Or better yet, save yourself some money and do it yourself. The IRS provides a list of approved websites where you can file your federal tax return for free.

If you have a more complicated return or think there is even a remote possibility that you might get more money than the standardized deduction (which is $5,800 for singles and married couples filing separately and $11,600 for couples filing jointly), I would start amassing all my paperwork now. A full list of standardized deductions can be found at the IRS website. If you aren’t sure of what documents you need outside of your W-2, you can also download the IRS’s full list of eligible itemized deductions for 2011.

Once you have determined and collected all your eligible deductions and necessary paperwork (which should be well before the due date and tax preparer rush), go ahead and complete your return. Then check you math at least once, even if a tax preparer completed it. When you are entirely sure that everything is as it should be, go ahead and file.

One final piece of advice – sushi and mochi ice cream make this whole process way more enjoyable. Feel free to indulge.

You want this. Don't even lie.

Images by Arvind Balaraman and Maya Picture @ FreeDigitalPhotos.net