Taxes are among the worst debts to have. By filing your returns timely, you can avoid having these debts.
Tax debts grow at a very fast rate. In addition to the interest, there are penalties.
From IRS form 746: “We may charge penalties if you do not make required deposits on time, make deposits for less than the required amount or if you do not use EFTPS when required. We will not charge penalties if you did not willfully neglect to make a proper and timely deposit and you have a reasonable cause.”
These penalties start at 2% for deposits that are 1 to 5 days late, but can go up much higher.
Under Wisconsin Law, unpaid taxes accrue interest at the rate of 12% per annum.
There are other reasons to file your tax returns early each year. These include avoiding fraudulent tax filers. Stolen identify is a big problem. One of the ways that criminals can act with your identity is to file false tax returns and claim your refund. By filing your return early, you will likely beat the criminals in filing. Once the IRS has received a return and provided a refund, it will not issue another without detailed investigation.
Another reason to file early is simply to relieve your stress. Unfortunately, filing tax returns in our country has become a very difficult task. Many people have to hire others to complete their returns. Whether you are doing the return yourself or having someone else do it, completion of tax returns is a stressful undertaking. Until such time as Congress adopts a simple tax return procedure, that anyone can do quickly and easily, you can reduce your stress level by getting on this task early.