The IRS did a commendable job of starting the 2019 tax season on time. Generally, one of the peaks in the season occurs right away with those expecting refunds wasting no time to get their money back.
This year, the number of returns filed in the first full week was down 12 percent from 2018 (16,035,000 from 18,302,000). Even with fewer filings, processing times were taking longer. Twenty-five percent fewer returns were processed in the first week when compared year over year.
Refunds have skewed lower so far in 2019, which is likely related to the change in withholding tables in January 2018.
The psychology behind delay
The federal shutdown and lower reported refunds may explain in part the slow start. Another issue could be what has been called the “mere urgency” effect. It might be why in a normal year about 15 percent of taxpayers wait until April 8 or later to think about their taxes. Another 13 million request an extension to file.
Deadlines can take over life. In one survey, 30 percent of those polled put deadlines as the most anxiety-inducing component of their job. The “mere urgency” effect describes how we value tasks in relation to their deadline. We put off bigger tasks with a distant deadline in favor of the more minor and immediate ones (emails or dishes).
Break the larger task into smaller steps
To avoid a last minute 13-hour rush to get everything together to meet the April 15 deadline, split it into smaller pieces. Here is a three step breakdown:
- Collect documents in a pile or file folder. All the W-2s, 1099-MISC and other apparent tax forms arriving in the mail. Locate your tax return from 2018 or request a tax transcript.
- Take a few minutes to organize documents and ballpark your figures. Are your expenses high enough to itemize with the higher 2019 standard deduction ($24,000 for a married couple or $12,200 for individuals)? Are you employed by a flow-through organization, LLC or partnership? Do you have investment property? Answers may help determine whether to consult a professional tax preparer or CPA.
- Then make your appointment with an accountant or block some time over a couple or weekends to complete a tax return yourself.
Estimates are that hundreds of millions of errors occur in a typical year. With new forms and rules going into effect, there are even more ways to make mistakes. Do not wait until the last minute this year.