The Best Reason to Do Your Taxes This Week: File Before Your State Runs Out of Refund Money
Employers are required by federal law to postmark W2s by January 31st. Allowing for even the slowest of mail delivery, by today — February 15th — you should have everything you need to do your taxes for 2011 (unless you are someone who is involved in a lot of investments and things that involve a lot of stuff I don’t understand, then maybe you can’t do them yet).
I wanted to take a moment today to encourage you to work on your taxes and file them this week — instead of waiting until April 15th to do them — so that you can get your refunds as quickly as possible. Here in Illinois, if you file your taxes in January or February (or even the beginning weeks of March) you get your state refund relatively quickly — something like two weeks after your filing is accepted by the state.
If you wait to file until April, your refund could take up to six weeks to reach you because the state runs out of money to pay people their refunds…and the delay involved becomes a matter of the state waiting for other revenue to come in before it can pay you what it owes you.
It has been almost five years since Illinois had enough funds to pay some of its big vendors on time, and every year more pressure mounts for them to settle up those accounts. Anecdotally, I’ve found that the longer people here in Illinois wait to file their taxes the longer they have to wait for their returns.
Using my boyfriend Justin as an example, last year he filed his taxes on April 15th — and he didn’t get his refund deposited into his account until the end of June. This year, we filed his taxes in mid-January (the day after he got his w2s) and his refund is already in his account. The same stories are true for other friends here in Illinois who file their taxes early like this.
Please think about this — because I’d like to see you be one of the people who get your refund early instead of someone who has to wait for months while an insolvent state like Illinois scrapes together coins from the sofa cushions to pull together enough for your refund.
Chime in below if you have a different take on this — but I have never seen any advantage to waiting until April 15th to do this when you can have all your taxes done and avoid the refund-waiting or other grief if you just take care of this in February.
I’d love to hear why some people wait so long to do their taxes and if there is a real reason for that — because if you are waiting on W2s to reach you, then your employer is in the wrong for not mailing those to you before January 31st so you can actually report that company to the IRS for these delays.
Thoughts?
© 2012, Kevin DuJan. All rights reserved.
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So now we've come to the point where, if a state does not have enough money to send your refund, then perhaps it's better that YOU owe THEM.
Jeanne,
I am not an accountant and I do not want to give anyone tax advice, but I think it’s a good idea to sit down with an accountant and determine how many Dependents you should claim on your employment forms so that the lowest amount of tax is taken out each week from your pay. This way you are not giving the government an interest free loan — and then you won’t have to worry about not getting a refund.
Justin has it set so that he only gets like $300 in refunds because just enough tax is taken out, but not so much that the government owes him a ton later.
I would rather find out in January that I owe the Government a couple hundred in April and then I could save up to pay them EXACTLY on April 15th than worry about not getting my refund from these people.
As an aside,,that is exactly what has been happening in Guam for many years. Their tax system is an overlay of the fed system and they have not been repaying overpaid taxes for years. I was living there while flying for a US airline and always planned on owing them a little money. Completely corrupt and screwed up system.
My dad used to do all of our taxes as soon as we got our W2s in early-mid January, when he passed away, I started doing the taxes and kept his habit. After Husband and I became parents, husband started hiring someone to do the taxes since I was busy with babies, but he has kept the early filing tradition, and thank goodness, because last year, New York delayed refunds for people who filed after we did! We already had our refund by the time they announced that they were going to hold off on sending more out. Early filing is always a good idea, even if your state isn't broke, you still get your stuff back faster if you do it early.
I have always done my own tax filing. I also try to have as little as possible in a refund, or perhaps owe a little. I want my money drawing interest for me, not the government. I work my taxes as soon as I have all the paperwork, if I owe I hold it until April 15th, if I am due a refund I send it in, always before the end of Feb, but usually in the beginning of Feb. This year I filed on Feb 4th. Having been in Texas and Florida there was no state income tax, now living in Arkansas there is, so have to file that also, and AR won't due funds transfer they write actual checks, go figure. I just checked for the fed refund deposit and NOT YET.
Like you, "I also try to have as little as possible in a refund, or perhaps owe a little." But I am somewhat embarrassed to admit that I am too intimidated by the tax code to file my own tax returns. I have always been reasonably competent in my math courses, and even passed Calculus I with a B, but the IRS scares the you-know-what out of me! I don't mind paying a preparation fee in exchange for the peace of mind, but I kinda wish I felt more secure in my own abilities.
Have you tried using Turbo Tax? If you don’t have complicated taxes, it’s great. The federal taxes are a free service via Turbo Tax and then you pay to file the state electronically. I think that was $30. It was worth it though, instead of sending the state taxes in the mail. I love Turbo Tax.
PLEASE chime in if anyone knows better, but I used to do taxes by hand using the booklets and I had someone do it for me once just to see if an accountant could do a better job and I am happy with the Turbo Taxing.
It took 30 minutes for me to do both mine and Justin’s online this way. Super easy.
You know — just for kicks, if you had your taxes done by an accountant, just do them via Turbo Tax yourself too. It’s free. Just plug the numbers in and see how close it comes to what the accountant did for you.
I would LOVE to know if the accountant did a much better job than Turbo Tax. That would be a big help for anyone stumbling over this thread in the future, as I have yet to find a good discussion on whether Turbo Tax does as well of a job as hiring an accountant to do it for you.
It's funny, I've been a computer geek since the Atari 400, but never wanted to use Turbo Tax. I tried Turbo Tax last year and couldn't figure it out, went back to doing it with a Big Chief Tablet and stubby pencil.
I was audited for 2006, the year I retired, it was a tough filing year, and I did screw up. It all worked out eventually, I paid a small fine and they acknowledge their own mistakes in the process, refunding me some money when it was all said and done. (they wanted $3500, I agreed to and paid $350, then they sent me back like $20) I did have to get the consumer advocates through my senator involved though.
To Elinor, don't be so concerned those IRS agents are nice guys and gals
A second and very good reason to file early: identity theft.
http://www.washingtonpost.com/business/economy/do…