Price of Procrastination: Late Filers Pay More to Get Taxes Done

On the fun meter, having your taxes done ranks up there, with say, getting a root canal or cleaning your bathroom -- so it comes as little surprise that many people procrastinate about filing their returns.

But there's a price to pay for putting off your date with the IRS, according to a new tax preparation survey by TechBargains.com: Procrastinators, defined as taxpayers who file in April as well as those who apply for extensions and file even later, tend to pay an average of $163 to get the job done, while early birds who file in January and February pay about $87.

Disorganized late filers often end up paying more to their tax preparers because of the extra time it takes.

"It may take us more time to prepare the extended return -- it could be more complicated or the records could be in bad shape," Mary Kay A. Foss, a C.P.A in Danville, Calif., tells DailyFinance. "Since our bills are related to the amount of time we must spend, the bills are often higher than the ones filed earlier in the tax season. So not only are they unhappy because they may have missed a deduction, they think that they're paying more for the return as well."

What's more, late filers are often disorganized -- which can lead to missed deductions, Foss says. "Paying taxes can be very stressful -- especially if [taxpayers] haven't prepaid enough tax or if your records are in disarray. I find that people who wait until the last minute always feel that there are other deductions that they may have missed because they didn't have enough time to do the best job in gathering information."

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Now, while Foss notes that later filers also end up paying more in taxes, it's not so much that filing late causes taxpayers to pay more -- it's that late filers are generally the ones who owe more to Uncle Sam in the first place.

"I wouldn't say that filing late causes you to lose money," Foss says. "The early filers are those expecting refunds or needing the return to apply for financial aid for a college-age child. Those that file in April may have determined earlier that they owe a lot of money and don't want to part with it until the last minute."

The survey also found that 89% of early filers feel positive about their tax preparation method, whereas 62% of procrastinators don't feel good about how they've filed their taxes.

"If you are getting a refund, owe very little tax or need the return early for the college forms, having everything done on time or early is a very good feeling," Foss says. "These people know they've accomplished an onerous task early enough that they can enjoy the springtime, spring break or the Final Four games. They're happy the returns are done and pay our bills quickly."

By contrast, "clients who file at the last minute often tell me, 'I'll be better next year, I'll be organized and we won't need an extension,'" Foss says. "It is rare that they change their behavior the next year."

[Via: TechBargains]