Every year, millions of taxpayers file their returns before
Valentine's Day, and not because they have a lot of love for the
IRS. Most early birds are anxious to receive their refund, and with
good reason. The average refund for 2011 returns totaled nearly
How Much Will a Payroll Tax Hike Cost You?
But increasingly, taxpayers are being forced to wait for their
The IRS has warned that lawmakers' inability to agree on
how to stave off sharp tax hikes and widespread spending cuts could
lead to filing delays while the agency updates its forms and
computer systems to reflect last-minute changes in the tax
And political wrangling isn't the only reason that filing could
be delayed. A new disclosure rule being phased in will require
mutual fund companies to report to the IRS the cost basis for
mutual fund shares purchased on or after January 1, 2012, and sold
after that date. The information will also be provided on Form
1099-B, which investors use to report investment losses and gains
on their tax returns. Financial-services firms are supposed to
provide 1099-Bs to their customers by February 15. But when the
cost-basis rule went into effect for stocks last year, many
brokerage firms asked the IRS for an extension, says Melissa
Labant, tax director for the American Institute of
Cer�tified Public Accountants. Financial services firms
are likely to request a similar delay this year, she says.
Filing delays aren't just inconvenient; they could also
expose you to fraud.
Armed with stolen Social Security numbers, crooks are pocketing
billions of dollars by filing phony tax returns and collecting the
refunds. Victims of tax-related identity theft sometimes wait a
year or more for their refunds.
Filing early is one of the most effective ways to protect
yourself from this crime
, but if you're waiting for an errant 1099-B, that may not be an
If your tax return is put on ice, don't use the delay as an
excuse to procrastinate. You can still pull together information on
your income, charitable deductions, mortgage interest and property
taxes. You or your tax preparer may be able to get a start on your
return while you're waiting for your investment documents to
arrive, says Tim Steffen, director of financial planning for Baird
Private Wealth Management.
You can free yourself from this annual waiting game by reducing
the amount of money the IRS takes from your paycheck.
Adjust your withholding by filing a revised Form W-4 with
The form is used to determine how much in taxes is withheld from
your paycheck. The more allowances you claim, the less is
If your 2013 financial situation hasn't changed much since last
year, you can use our
to figure out how many allowances you should claim. You'll give
yourself an instant raise, and your refund will no longer be held
hostage to political gamesmanship.
Just don't get carried away. If you have too little withheld,
you could get hit with an underpayment penalty. But owing a small
amount at tax time is simply good financial management, Steffen
says. That way, you have the use of your money all year long.
This article first appeared in
Kiplinger's Personal Finance
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