Your dental surgery. Your colonoscopy. Your income taxes.
There’s always a massive bout of procrastination across the U.S. in the weeks leading up to Tax Day, which is April 18 this year. This foot-dragging has been called an American tradition, up there with not saving enough for retirement and fantasizing about what we’d do if we won the lottery.
But those who file their tax returns in the first two weeks of April, or after the deadline, often aren’t slackers. Some taxpayers may have no choice but to file at the last minute — and suffer surge pricing for their tax preparation — because forms they need haven’t arrived.
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Some are minding their cash flow, because they owe the Internal Revenue Service money. Then there are people, like some college students, who aren’t actually procrastinating but just don’t know that they could get money back if they filed a return.
Filing close to, or after, April 18 could be a sign you’re a member of the financial elite. Those who file closer to the deadline are, in general, wealthier, said Lisa Greene-Lewis, a certified public accountant and TurboTax blog editor, and tend to have more complex taxes. These are people who, unlike many early filers, don’t need to rely on a big tax refund for car repairs or to meet some other pressing household need.
The average refund processed in April of last year was $2,309, or 19 percent lower than the average refund of $2,853 processed from January to March of that year, according to H&R Block. Fewer people filing in April get refunds: 65 percent of those returns got a refund last year, compared with 81 percent of returns filed from January to March.
1. The procrastinators
Wealthy or not, some 20 percent of Americans are “chronic procrastinators,” according to research done by Joseph Ferrari, a professor of psychology at DePaul University. The fear and loathing of doing one’s taxes can be extreme.
A recent WalletHub survey found that 35 percent of those surveyed would rather have the sex talk with their kids than do their taxes. (The nationally representative survey of 1,000 taxpayers also found that to get a “tax-free future” 27 percent of those surveyed said they’d get an IRS tattoo, and 11 percent said they’d clean Chipotle toilets.)
But procrastinators may want to aspire to the ranks of those who file after the month of April. While a much lower-than-average percentage of filers got refunds then — 51 percent in 2015, according to H&R Block — they got a much higher-than-average refund of $3,500.
If last year’s pattern plays out again, about 66 percent of people will have filed their taxes before the two weeks leading up to the deadline. During the final two-week stretch, some 22 percent of taxpayers tend to suck it up and file. Then there are the 12 percent or so of taxpayers who will file after the deadline. (A recent survey by Wallethub.com found that 5.7 percent of respondents expected to file after the April 18 deadline this year.)
2. The extenders
That 12 percent includes the ranks of the extenders, who file a Form 4868 to be allowed to file taxes as late as Oct. 18 (six months after the deadline). The usual percentage of taxpayers who file extensions is about 8 percent, according to the IRS.
That adds up to a lot of taxpayers. In 2011, 11 million people filed for an extension. In 2013, that number rose 20 percent, to 13 million, and stayed at that level in 2014.
Extenders can congratulate themselves or their accountants on actually filing the form, on time, that gives them six months to file the final forms. They still have to pay estimated taxes, however — something Greene-Lewis said some late filers are shocked to discover. If you owe, whatever you pay has to be within 90 percent of your liability or you’ll pay a penalty.
Extenders are a predictable bunch. “Most of the people who file later typically procrastinate every year, even if they’re getting a refund,” said Greene-Lewis. And, yes, many wait until right around the six-month deadline, she said. By September of 2015, only about one quarter of all taxpayers who filed for an extension had filed their taxes, said Martha O’Gorman, chief marketing officer for Liberty Tax Service.