Tax season begins at the end of January, but one in seven taxpayers don’t file before April 8. Six million more file their taxes late, and another 13 million ask for an extension to file. If you haven’t filed taxes yet, now is probably the best time. Here’s why.
Why doing your taxes now is better
Taxes aggravate us. More than half of Americans find taxes stressful. Sure, there’s the paperwork, the rules, and the feeling like you probably could get more money back if you knew what you were doing. And then there’s the deadline. One survey found that 30 percent of its respondents said deadlines were the most anxiety-inducing part of their job. Second on that list was “Life of another at risk.”
Compounding the issue is the fact that when we face deadlines, our priorities go out of whack. A 2018 study lays out what it calls the “mere urgency” effect, which is that we value tasks based on how soon they have to get done, not how productive they’re going to be. In other words, we put it off in favor of the small things we want to get done that minute (dishes, homework, emails) until suddenly it’s April 14 and you’ve got 13 hours of form sorting, accounting, and frustration to get through right now.
The paperwork you need to pay your taxes
Start your task by getting all your paperwork in one place. There are two forms you absolutely need to do your taxes:
W-2: If you work a job with a regular paycheck and taxes regularly come out of that check, you should have gotten a W-2 by January 31. Every job you worked that takes out taxes should send you a W-2, even if you only got one paycheck from them.
1099-MISC: This is for what the IRS classifies as “miscellaneous income” more than $600, which can be anything from doing a side hustle with a dog-walking service to “cash payments for fish.” Yes, that’s really in the tax code. If you got paid to do it and taxes weren’t taken out of your check afterwards, you’re probably getting a 1099-MISC in the mail. That should also be in your mailbox or your email by January 31, although a few types of income have until mid-February to send a 1099.
And, of course, there’s the Form 1040, which you can find online or at your local library.
Tips for filing your taxes
It’s useful to do a quick back-of-the-envelope calculation. Take your taxable wages, subtract the standard deduction, and then multiply that by the percentage in your bracket. For example, if you were single and made $50,000, you’d subtract $12,000 from that, leaving you $38,000, putting you in the 12% tax bracket. Multiply $38,000 by 0.12 and you get $4560. Compare this to the total amount of taxes you’ve paid for the year and you’ll get roughly what you’ll owe or be owed by the federal government. This is just a ballpark figure, especially if you plan to itemize your deductions, but it’ll give you a baseline to spot any egregious errors. And if you’re dreading the results, uncertainty will only amp up your anxiety and make you more likely to put it off, so it can help settle your mind, for better or worse.
Budget time over a few weekends so you don’t feel pressured, and make a point of stepping away every few hours to do something else. The brain hates tasks it thinks of as unrewarding and the definition of “reward” can shift depending on how desperate your brain is. You may hate doing the dishes, but after a few hours with Form SE, your mind might yearn to empty the sink instead.
Nobody seems to quite know how many mistakes are made on our taxes, but there’s usually hundreds of millions in any given year. It’s not really a surprise; there’s 77 line items and complicated instructions to follow. But since you’re doing them early this year, you can really take the time to review your numbers, consult your accountant friend, and/or cry on the phone to your family members.
Write out what you’re doing step by step on a sheet of scratch paper, even if you’re using a calculator. That’ll make it easier to check to see if something went wrong. And take your time when reading the instructions.
Once you’ve checked your math, run your return against the checklist of common errors. Even a misspelled name can throw a wrench in your return, so now’s the time to nip it in the bud. When you’re all set, you can mail them in and then kick back—at least until this time next year.
