Tax Planning

Your taxes are not done? Relax, you have options


The clock is ticking for tax procrastinators — today is the deadline for filing your 2015 returns.

Plenty of consumers wait until the 11th hour to file, and despite having an extra three days this year to prepare, many people are still scrambling. The Internal Revenue Service has said it expects it could receive more than 5 million returns Monday, ahead of the deadline. According to data released last week, the agency had received more than 107 million returns by April 8, or about 70 percent of the 150.6 million it anticipates this year.

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Should you push to wrap up your tax prep today, or just file an extension?

"We're already at that point in time where if you haven't started doing your work, you should file an extension," said certified public accountant Benjamin Tobias, president of Tobias Financial Advisors. "You don't want to rush anything."

Bear in mind that the IRS estimates the average Form 1040 filer will spend 16 hours on tax prep, including eight on record-keeping and four actually preparing and submitting the forms. Average start-to-finish time burdens for 1040A and 1040EZ filers are seven and five hours, respectively. For most filers, there just aren't enough hours left in the day, if you're starting from scratch.

Test your tax smarts

Filing an extension is easy and relatively painless, said Tobias, who is also a certified financial planner. Spend your time today doing as much prep as you can to determine what, if anything, you owe the IRS, he said. Your payment must be sent electronically or by mail today, even if it's not accompanied by a return — otherwise, late-payment penalties may kick in, depending on how much you've already paid and how much you owe.

(See our guide for tips to navigate the extension process.)

Other avenues procrastinators might take, in comparison, have more expensive consequences.

Rushing through last-minute prep is one of the worst things you can do, Tobias said.

You might make a mistake — which would require you to file an amended return. Such filers can face penalties if they owe the IRS more than originally anticipated, while those hoping for a refund often have their money tied up for months. The IRS estimates processing of amended federal returns can take 16 weeks. (See our guides below to commonly missed tax deductions.)

Here's who gets hit hardest at tax time

Bury your head and fail to file either a return or an extension, and you'll owe late-filing penalties on top of any late-payment penalties, Tobias said.The penalty for late filing, which kicks in the day after the filing deadline, is 5 percent of the unpaid taxes for each month or part of a month that the return is late.

If you do file an extension, stop procrastinating. Tracking down deductible expenses won't get any easier if you wait until the new deadline in October to finish your return, said Greg Rosica, contributing author to accounting firm Ernst & Young's "EY Tax Guide 2016."

"Don't hesitate to finish it," he said.