With Tax Day just around the corner, many taxpayers will be canceling their fun
weekend plans to hunker down and file their returns.
Nearly 30 percent of taxpayers wait until the last two weeks to file, according
to the IRS, with many scrambling in the final hours to meet that 11:59 p.m.
Monday deadline. More than a few will spend the day searching frantically for
bank statements and sprinting to the post office, but a panic attack isn't the
only risk they face. Last-minute filers are more likely to be careless with
personal information and make a mistake on their returns that could result in
losing out on a refund, paying steep penalties or falling victim to identity
theft, experts say.
"When anyone rushes, they become sloppy," said Scott Mitic, CEO of TrustedID, a
Palo Alto, Calif., company that helps combat identity theft. "And when people
become sloppy, there are risks with identity theft (that) can become extremely
costly."
Identity theft is a rampant crime year-round _ the IRS identified more than 1.1
million incidents in 2011 _ but the crime picks up in the final days before tax
deadline. Identity thieves use fraudulent emails and phone calls, often claiming
to be the IRS, promising new deductions and asking for personal information.
If that happens, Mitic said, hang up the phone. The IRS does not send emails and
does not call taxpayers; it communicates through the U.S. Postal Service. But
even cautious taxpayers are more likely to give out personal information when
under stress.
"If this were three months ago, you may not feel so pressured to give out that
information," Mitic said.
Rushed filers are also more likely to leave tax documents sitting around the
house in plain sight for a nanny, housekeeper, delivery person, guest or any
willing thief to swipe. Even in your own home, tax documents should be locked up
in a safe place, Mitic said.
"The majority of identity theft is committed by people we know, people who are
around us," he said. "It's really a crime that's more close to home."
Taxpayers looking for last-minute help from a professional are more susceptible
to tax preparer scams, said Mary Beth LaMunyon-Jones, registered tax preparer
and chairwoman of the California Tax Education Council. Many reputable tax
preparers stop accepting clients in late March or early April, pushing more
customers to illegal preparers when the eleventh hour strikes.
"It's especially important for consumers to verify their tax preparer is legal
during the last-minute rush," she said.
It's also easier to include wrong information on a return or forget to report
information. Parents rushing to meet the deadline are more likely to put down
the wrong Social Security number for their child and miss out on huge
deductions, said Lisa Greene-Lewis, a lead CPA for the American Tax & Financial
Center at TurboTax. She often sees harried taxpayers forget to report charitable
contributions, education payments and summer camp fees _ deductions that can add
up.
She said filers who wait are also more likely to misplace or lose documents so
they don't report all their income for the year. These mistakes could trigger a
delay in processing any refund the taxpayer is owed.
It's usually the same taxpayers year after year who procrastinate, Greene-Lewis
said, even though e-file and free software programs have made filing easier than
ever.
For some taxpayers, the delay is necessary to cobble together the money they
owe. Others say they're waiting as long as possible before they begrudgingly
write a check to the government.
But come 11:59 p.m. Monday, taxpayers will have to bite the bullet. The IRS
offers an extension to file until Oct. 15, but the extension does not mean more
time to pay. Taxpayers who file for an extension and owe must still send the IRS
a payment within 90 percent of the estimated taxes owed by April 15, or get hit
with a late-payment penalty and interest every month until their taxes are paid
in full.
Tax experts say the extension might be the right choice for people who don't
have all their documents, but for most, it's not a great option. If think you
want an extension, they say, make sure you really need one.
"There's no reason you can't really get it done in time," Greene-Lewis said, And
a piece of advice for next year, she said: "Don't procrastinate."
___
TIPS:
Here are some tips for last-minute tax filers:
_E-file if you can. If you mail in a paper return, take it to the post office
(verify the last collection hours to ensure you get your return in the mail on
time); do not leave it in your mailbox. To get the April 15 postmark, the
deadline is 11:59 p.m. Monday.
_Double-check your math. Be sure to enter Social Security numbers and names for
all individuals on your tax return exactly as they appear on their Social
Security cards.
_Make sure to enter bank routing and account numbers correctly for direct
deposit of your refund.
_Remember to sign the return. E-filers will sign the return electronically using
a Personal Identification Number.
_Keep all tax documents in a safe and secure spot where they are out of sight.
_Use only a licensed preparer and request their PTIN to verify them.
SOURCES: IRS, TurboTax, California Tax Education Council and TrustedID
___
CAN'T MAKE TAX DAY DEADLINE?
Here are some tips for taxpayers who can't make the filing deadline:
_The deadline is Monday, April 15, 11:59 p.m.
_File for an extension until Oct. 15:
http://www.irs.gov/uac/Extension-of-Time-To-File-Your-Tax-Return
_With an extension, you must still pay at least 90 percent of the estimated
taxes you owe by the April 15 deadline, or you'll end up owing 3 percent
interest, compounded daily, and a half-percent late-payment penalty each month
on any unpaid taxes.
_Be sure you do something by Tax Day _ the failure-to-file penalty is 5 percent
per month on any unpaid taxes.
___
(c)2013 San Jose Mercury News (San Jose, Calif.)
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