Today is May 10 and I am sure by now that all of you have filed your tax returns and, oh yea, gotten a refund. Oh! You don’t know when is the deadline? Well not to worry because you have until May 17 to file something. Today, while most CPA’s, Accountants, Financial Advisers and Tax Attorneys want to scare you into avoiding the punitive tax consequences of not filing your return, I think we should talk about the non-tax benefits of filing your tax return. Let’s think outside the box. No! Let’s get rid of the box!
If you are in the market for purchasing a new home or relocating, one of the documents your lender may want to see is the latest copy of your tax return. This is a great non-tax reason for why you should prepare and file your return. The request is not about your refund, but it is more about your character. Lenders or bankers want to see that you are responsible and a good person. Therefore, one way to measure character is whether or not this borrower files his or her taxes on time or at all.
If I have said it once I’ve said it a thousand times, money is the number one reason for divorce. Which brings me to this controversial question? Should you ask your perspective partner to show you his or her tax return? What does it say about your perspective spouse if he or she is delinquent in filing their tax return? Could that lead to financial trouble later on in the marriage? Seeing your future husband or wife’s tax return could also help give perspective to certain financial behaviors. All I’m saying is that if there is no financial transparency in premarital or marriage counseling, there won’t be any, “and they lived happily ever after.”
This may not be something really apparent, but if you fail to file your taxes it can provide an opportunity for scammers and other characters to impersonate you and steal your refund or create other mayhem. How would you like to know that someone else claimed to be you, filed and provided all kinds of false deductions and other information? Trying to fix a mess like that could take several years with the IRS granting you a special pin number and you not being able to use your own social security number.
Another good non tax reason to file your taxes would be to see if you qualify for IRA contributions and how much you can stash away for retirement. Usually, there is gross income and other tax labels such as modified gross income amounts associated with how much you can put towards your retirement annually. You may not know if you qualify and how much you qualify to put into your retirement without some tax computations.
Starting a New Business
If you are going to start a new business it would be wise to file your tax return. Usually, banks, government, state agencies or partners want to see your past or most recent tax return in order for you to qualify for loans and other opportunities. Banks and other business partners base their lending and access to fund projects on a person’s personal tax return filing. To avoid scrambling or holding up your dream project at the last minute, it would be wise to go ahead and file your return this year.
If you are not ready to file now, at the very least file an extension and save yourself some money!