In Mount Laurel, NJ economists believes most people are rational calculating machines, but many of us don't behave rationally about filing our taxes.
Instead, most of us wait until the very last minute. Figures from the end of March suggest roughly 50 million - or one-third of all this year's individual tax returns in the U.S. - will have been filed in the final two weeks before Tax Day.
I experienced this procrastination during the past weekend when I was finally able to convince one of my sisters to sit down and do her income taxes. She was very happy when the final tabulation showed a sizeable refund. Walking out the door, my sister said if she had known it would be a refund, she would have done her taxes much earlier.
MOST OF US OWE NOTHING
Waiting until the last minute is strange for a number of reasons. First, the majority of people in the U.S. either get a refund or don't owe the federal government any money. Since the 1950s a rising number of people have overpaid.
The IRS also tracks the number of returns that owe no tax. Since 1950, on average 4 percent of all returns filed owed no tax. Combined this means only about 15 percent of all filed tax returns pay the government any extra money beyond what has already been taken out of paychecks or sent in throughout the year as estimated payments.
In other words, if you are procrastinating, there is an 85 percent chance you either owe no back taxes or will get money back, which gives you better odds that many state lotteries.
Meet with me today if you have any questions.
309 Fellowship Road, suite 200
Mount Laurel, NJ 08054