Understanding when people file their taxes

January 10, 2019 : Annelise Wiens

With about three months to file during tax season, an additional six months for those who file an extension, and generally three years to file to claim a refund, people are filing taxes throughout the entire year. When people choose to file their taxes depends on their personal preferences, financial situation and tax situation. [See related: Four groups of people who don’t have to file by April 15]

“There’s not an exact right answer about when you should file your taxes, except perhaps, on time,” said Catherine Martin, senior tax research analyst at The Tax Institute at H&R Block. “Also important responsibilities are to ensure you have the information you need to file an accurate return, and to meet the payment deadlines so there aren’t penalties or interest. There can be advantages to filing early, such as potentially getting your refund earlier and even lowering your risk for tax identity theft. No matter when and how you choose to file, H&R Block has more ways to file than anyone else.”

Because H&R Block helps all kinds of tax filers, in person, online and virtually, it knows more about consumer behaviors than anyone else. Here are the top six reasons people file when they do, according to H&R Block:

1. They file early to try to get a refund as soon as possible

While consumers will get the same size refund whenever they file during the tax season, getting that refund earlier than later can incentivize people to file as soon as possible, particularly if they depend on their refunds to pay bills or other essentials. Although the IRS will hold refunds claiming the earned income tax credit (EITC) or the additional child tax credit (ACTC) until mid-February, it’s still possible for people to get their refunds within a few days of the IRS opening its e-file system, which is Jan. 28 this year.

2. They file early to prevent tax identity theft

Some early filers aren’t necessarily motivated by their refunds, but want to get their tax return in to the IRS before criminals can file in their name and Social Security number (SSN) or individual tax identification number (ITIN). The IRS typically operates on a first-come, first-served basis, so once someone files using a taxpayer’s SSN or ITIN, subsequent attempts to file with that number will be automatically declined, setting off a months-long process for the taxpayer to reclaim their tax identity, file a return, and receive their refund.

3. They file later because they’re waiting for documents

Not all late-season filers are procrastinators. While most information documents should arrive by the end of January, like an employee’s W-2 reporting wages, or a 1099-INT reporting bank interest, some information documents won’t arrive until March. Taxpayers who own shares in an S corporation may not receive their K-1s until mid-March, leaving them with less than a month to prepare and file their return.

4. They file later because their taxes are more complex

Having a more complex tax return doesn’t make people wait until April to file their tax return; it makes people wait until after April to file. About three-quarters of returns filed between January and April were the most complex base form (1040) in 2017. After April, that rate jumped to 87 percent of returns filed using the 1040.

For tax year 2018, all filers will use the new 1040 form.

5. They file later because they’re less likely to get a refund

Not only does the size of individual refunds decrease as the filing season progresses, but refunds themselves become less common. Eighty-one percent of early filers got a refund, while 67 percent of April filers got a refund, and only 53 percent of post-April filers got a refund. The average April refund of more than $2,400 was 14 percent lower than earlier refunds. But though less common, refund size spiked after the April deadline to more than $4,000 on average.

6. They file later because they think they have to pay when they file

Many people believe they must pay any taxes they owe when they file their return. So, if they think they have a balance due, they wait until the last minute to file. The truth is not that straightforward.

“You won’t have to pay any tax due at the moment of filing; you can send a check or schedule a payment for whenever is comfortable for you. What’s more pressing is understanding when penalties and interest are triggered,” said Martin. “You’ll know if those apply from the notice you receive. It will explain the amount of the outstanding balance due and ask for payment.” [See related: First-time penalty abatement]

This year, those who paid at least 85 percent of their 2018 tax bill or 100 percent of their 2017 tax liability during 2018 won’t face penalties or interest through April 15. Those who didn’t pay enough throughout the year could face penalties and interest even if they file and pay early in tax season. [See related: How to avoid the 10 most common tax penalties.]

“If you have everything you need to file an accurate return, there’s no reason to wait to have H&R Block prepare your return, even during a government shutdown or before the IRS opens its e-file system,” said Martin. “When e-file opens, we file those returns that are already finished for our clients, either in our offices or using our DIY products. Those who file earliest will typically be first in line for refunds.”

For more information about tax filing options for tax season 2019, visit hrblock.com.

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Annelise Wiens

Annelise Wiens

Editor and Producer

As the newsroom editor, Annelise Wiens is interested in more than just tax and industry news, but the stories of H&R Block's 80,000 associates, their communities and H&R Block's world headquarters in Kansas City, Missouri. Wiens joined H&R Block in 2014 from a public relations agency, where she worked with clients in the financial services industry. Before that, she worked as a communicator for a senior member of the United States House of Representatives. She graduated from Biola University in La Mirada, CA with a bachelor's degree in history.

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