Time may not be on the side of those still neglecting to file their taxes.
Less than a month remains until the April 15 deadline for income-tax returns and tax payment due-process. Seeking an extension allowing you to postpone filing until October 15 is the usual action taken by time-pressed taxpayers.
Millions of people, primarily wealthier taxpayers, take an extension every year. It gives taxpayers extra time to compile documentation and finish their forms, therefore allowing them to miss the April 15 deadline yet avoid paying penalties and interest.
By Tax Day, they must, however, pay any taxes they anticipated owing.
This is not a typical tax-filing season, though, and some tax preparers are advising customers to act quickly to have their returns in. Taxpayers would be better off avoiding requesting an extension, they advise when at all possible.
This is so because the Trump administration’s aggressive attempt to reduce government-employee numbers now centers the Internal Revenue Service as a top target. That follows a deliberate attempt by the outgoing presidential administration, under Democrat Joe Biden, to greatly boost IRS payrolls in order to improve customer service and ramp down search of underpaid and unpaid tax liabilities.
The tax collector last month noted roughly 7,000 job losses while handling millions of returns. Some IRS employees who accepted the buyout offer from the administration can leave following mid-May. The Washington Post then reports that by mid-May, plans call for slashing IRS personnel by 18%.
Tax experts so report that following the layoffs in February, IRS processing and taxpayer service have not changed appreciably.
Drawing from the archives (February 2025): Some Americans are wondering why bother paying taxes this year given Trump’s IRS layoffs?
The IRS cuts have begged the issue of whether a stripped-down IRS will have sufficient personnel to handle the back-and-forth of queries, letters, and correspondence that might develop following Tax Day. Some preparers would much sooner not wait to learn.
Send in your tax return, they advise, if it is ready by April 15. If you need one to make your return totally precise, you can take an extension; they add. But avoid slinking back. Stated differently, resist the impulse to seize the whole six-month delay permitted by an extension.
“To the procrastinators, I’m saying this is not the year to do your normal procrastinating,” said Brian Schultz, a partner in the wealth-management company Plante Moran who handles high-net-worth households on their taxes. “There’s just no telling how much of a problem that could create as a processing and people-power issue,” he said, considering expected IRS employment losses.
Some tax preparers are nudging their clients especially to get going. To finish her clients’ taxes, Twila Midwood cut the deadline for turning in documentation and expense receipts. “I’m just trying to get my clients to take that small extra step to protect themselves in the event we see any disruption in services,” said Midwood, president of the National Association of Enrolled Agents and tax manager of Advanced Tax Center in Rockledge, Fla.
Over 18 million extension requests came to the IRS in 2023; this year’s projection is almost 20.3 million. Melanie Lauridsen, vice president of tax policy and advocacy for the American Institute of CPAs, said for years accountants have struggled more to find answers and fix return issues in the summer and fall.
Customer service and processing “have been consistent with recent years,” said Lauridsen thus far. That might change, though, should more layoffs at the IRS materialize. “I do wonder sometimes. I do have to worry and have questions.
Whether April 15 or later, her greatest advise is to file when the return is accurate and ready. “I believe people should keep doing business as usual concerning filing.”
The IRS didn’t reply right away to a comment request. Through mid-March, the agency has gotten 70.3 million returns, almost 1.2 million less than at the same stage last year.
Many affluent taxpayers need extra time.
For wealthier Americans this year, the issue of whether to extend – and, more especially, how long to wait before filing – presents a fresh tax-strategical twist.
Although there are no income restrictions controlling who may and cannot accept the extra filing period, households that file returns following an extension typically have more complex tax circumstances. Usually, this indicates they have sources of money other than their salaries.
While tax records on some firm stakes and hedge-fund gains may be months away, tax experts say at this stage in the tax season finalized brokerage statements are still flowing in.
Some who stretch their return dates do it for financial benefit.
Using a specific kind of IRA, called a SEP-IRA, small-business owners and self-employed individuals can create retirement savings. Through the end of the tax-filing season, they can contribute including the additional time provided by the extension. April 15 contributions are required of traditional IRAs.
Before he added more money to his SEP-IRA account, a client of Schultz recently took an extension to observe how the stock markets would fare.
Paper checks, paper returns, actual headaches
Now several years passed its epidemic-era backlog of paper returns, notices, and responses, the IRS is The jam-up brought attention to the agency’s need for improvements as well as the possible aggravations resulting from IRS lag.
For Schultz and other accountants who experienced it, memories remain clear. He’s attempting to gently prod his clients ahead, and the approaching cuts at the tax-collecting agency terrify him somewhat. “It was rather difficult,” Schultz stated.
IRS statistics reveal that almost nine in ten income-tax returns submitted electronically last year instead of in paper form. Still, even little percentages are significant figures. Americans turned in hard copy versions of around 11.7 million tax returns last year.
Tax Watch, July 2024: From millionaires, the IRS just gathered “staggering” $1 billion in unpaid taxes; it’s going back for more.
These paper-filed taxes are the ones that accountants are especially trying to file quickly when IRS cutbacks hover.
Taxpayers must, for instance, file gift-tax forms on paper, Schultz said, which notify the IRS of gifts worth more than the annual exclusion level. His clients want to file the main return electronically, mail the gift-tax return, and take an extension.
Schultz said that the IRS counts the postmark as the filed date when it is verifying whether you have paid your taxes on schedule. In his experience, most of the time it did that during the epidemic backlog; not always, though. Assuming it takes months for a worker to read the envelope, Schultz said taking an extension means there is no disagreement regarding timing.
Florida tax preparer Midwood is advising her clients to pay electronically rather than by paper check mail-off. Some clients will still write checks to pay an amount owing or make their quarterly projected payments even though there is an online payment facility.
She said, online payments provide instant confirmation. “Anything to stop the paper process, I think that’s going to be your best bid,” she advised.
Get your taxes in on schedule; but, avoid rushing.
Said Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, moving quickly without rushing is wise counsel. “If you’re ready to file, this is probably a good year to file, and not to file an extension,” he advised Market Watch.
Rushing, though, can have negative effects. Someone can forget costs they could have subtracted or file before all of their tax records are in.
Should the figures not line up with what the IRS expects from a specific return, a taxpayer will get an IRS warning, therefore slowing down the procedure. Sending the required information to their tax preparers as it becomes available will help extension filers constantly piece together the tax-return puzzle, Schultz said.
Providing all the information at once can cause congestion that delays completely ready returns for the IRS, he advised. “We’re going to have staffing issues more likely the longer we go.”
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