Whew! Two days ago was the filing deadline for individuals and corporations. A month ago, the deadline for partnerships and flow-through entities elapsed.
Sure, I had a few clients who demanded an extension- until they were reminded that there is no extension for the tax payments due. (If you file an extension and owe taxes-and did not submit at least 102% of what you owed last year, you will be charged with penalties and interest if you still owe money to the Feds.) Only two clients had valid reasons for an extension- because they were STILL waiting for K-1’s (the equivalent of a W2 for an employee, a 1099 for a contractor, when one owns a portion of a flow-through entity). I sure hope the IRS hits those companies with the maximum penalty- $ 150 per month per K-1 for late filings!
But, I thought, just for funnsies, I would share the results of a survey of US taxpayers about their thoughts on the filing process.
Interestingly, preparing taxes might be annoying (11% consider it their least favorite thing to do)- but not as badly as they hate visiting the dentist (21%) or the 23% that detest having a spat with one’s SO (significant other; i.e., spouse, live-in pal, etc.).
Of course, the most disliked documents to handle were tax documents (46%), leaving insurance forms (36%), medical and dental bills (34%) in the dust of their disdain.
The mechanics of tax filing also fared better than I thought. 96% had no issues with scanning their information or sending it to folks like me to process (95%). Of course, that required the taxpayers to FIND their documents (with which 20% reported great issues)- and I believe many of these are my clients. (This year I had at least three clients provide me with 2015 data. Like that would let me file their 2016 taxes. Or, the one @$#^%E who refused to provide the social security numbers for any of her family members. [Yes, I refused to pursue her needs. My sanity requires more intelligent clients.])
Besides NOT finding the required documents, taxpayers had problems with printing the relevant data (19%), and about 1/6 (15%) were unable to keep track of all the necessary documents to process their tax return.
When folks are getting refunds, I was simply amazed that more than 1/3 of them (36%) used that money to pay bills. A quarter (26%) paid school tuition. I was pleased that about 1/7 (even though that is a pretty low percentage) used the money to amplify their savings or retirement funds (14%) or to take wonderful vacations (13%). [As far as I am concerned those are the two best uses for a refund. If you are going to overpay the taxman, at least consider that it serves as an enforced Christmas Club plan. (You are old enough to recall those plans that banks offered- we set the goal and they reminded us weekly or monthly to make the deposit. In return, the bank paid us NO interest. And, that was when banks paid interest, not those grand figures they now proclaim of 0.25%.)]
I was also blown away that of folks who file their own taxes, 8% use their smartphones! (Obviously, security is NOT paramount to these folks.) Only 5% found they could use their tablets to complete the forms, while 87% resorted to the tried and true desktop submissions. (By the way, smartphone submissions have grown from the 2% who did so in 2014 to that 8% this year.)
One last caveat. Those who file the last minute by themselves are the ones most likely to not worry about security. Because they are in such a rush to meet the deadline, they are likely to fall for any scammer or fake tax processor. As such, they are the ones more likely to be rewarded with security related problems.