With Tax Day just around the corner, many taxpayers will be canceling their fun weekend plans to hunker down and file their returns.
Nearly 30 percent of taxpayers wait until the last two weeks to file, according to the IRS, with many scrambling in the final hours to meet that 11:59 p.m. Monday deadline. More than a few will spend the day searching frantically for bank statements and sprinting to the post office, but a panic attack isn’t the only risk they face. Last-minute filers are more likely to be careless with personal information and make a mistake on their returns that could result in losing out on a refund, paying steep penalties or falling victim to identity theft, experts say.
“When anyone rushes, they become sloppy,” said Scott Mitic, CEO of TrustedID, a Palo Alto, Calif., company that helps combat identity theft. “And when people become sloppy, there are risks with identity theft (that) can become extremely costly.”
Identity theft is a rampant crime year-round — the IRS identified more than 1.1 million incidents in 2011 — but the crime picks up in the final days before tax deadline. Identity thieves use fraudulent emails and phone calls, often claiming to be the IRS, promising new deductions and asking for personal information.
If that happens, Mitic said, hang up the phone. The IRS does not send emails and does not call taxpayers; it communicates through the U.S. Postal Service. But even cautious taxpayers are more likely to give out personal information when under stress.
“If this were three months ago, you may not feel so pressured to give out that information,” Mitic said.
Rushed filers are also more likely to leave tax documents sitting around the house in plain sight for a nanny, housekeeper, delivery person, guest or any willing thief to swipe. Even in your own home, tax documents should be locked up in a safe place, Mitic said.
“The majority of identity theft is committed by people we know, people who are around us,” he said. “It’s really a crime that’s more close to home.”
Taxpayers looking for last-minute help from a professional are more susceptible to tax preparer scams, said Mary Beth LaMunyon-Jones, registered tax preparer and chairwoman of the California Tax Education Council. Many reputable tax preparers stop accepting clients in late March or early April, pushing more customers to illegal preparers when the eleventh hour strikes.
“It’s especially important for consumers to verify their tax preparer is legal during the last-minute rush,” she said.
It’s also easier to include wrong information on a return or forget to report information. Parents rushing to meet the deadline are more likely to put down the wrong Social Security number for their child and miss out on huge deductions, said Lisa Greene-Lewis, a lead CPA for the American Tax & Financial Center at TurboTax. She often sees harried taxpayers forget to report charitable contributions, education payments and summer camp fees — deductions that can add up.
She said filers who wait are also more likely to misplace or lose documents so they don’t report all their income for the year. These mistakes could trigger a delay in processing any refund the taxpayer is owed.
It’s usually the same taxpayers year after year who procrastinate, Greene-Lewis said, even though e-file and free software programs have made filing easier than ever.
For some taxpayers, the delay is necessary to cobble together the money they owe. Others say they’re waiting as long as possible before they begrudgingly write a check to the government.
But come 11:59 p.m. Monday, taxpayers will have to bite the bullet. The IRS offers an extension to file until Oct. 1
Source: MCT Information Services