What it means
In most countries, there is an annual window for filing the main personal return. The season usually runs for a few months after the end of the tax year, with a firm deadline at the close.
Some countries have different dates for different groups, such as the self-employed. For individuals, the work involves collecting income statements, bank interest certificates, receipts for deductible costs and records of investments.
The earlier these are collected, the less stressful the filing becomes. Many people also need documents from banks, employers and pension providers, which arrive at different times.
Businesses have a more complicated calendar. They may need to file annual returns, but also quarterly or monthly filings for payroll tax, sales tax and estimated payments, so for them there are several mini-seasons.
Missing one of these deadlines can result in penalties even if the annual return is on time. The season also affects the wider economy.
Tax refunds paid to households can boost spending in the weeks that follow, and businesses that sell to consumers sometimes see a seasonal lift. Local advisers, tax software companies and payroll providers all plan their year around it.
Advisers recommend preparing early. Gathering documents in advance, reconciling bank accounts and checking last year's return all help, and an early filer also receives any refund sooner.
Starting early also leaves time to fix gaps in the records. The nuance is that missing the deadline is costly even if you cannot pay in full.
Penalties for late filing are often higher than penalties for late payment, so filing on time and arranging payment later is generally better than filing late. If you cannot pay, contact the tax authority, since payment plans are often available.
In practice
Real-world examples.
Example
A freelance editor sets a reminder for early January to collect her invoices and expense receipts. By mid-February she has a complete set of records. She files before the rush, receives her refund quickly and avoids paying a late fee. She also files an estimate of next year's tax to plan her cash.
Example
A small accounting firm hires two temporary staff for the spring to handle extra returns. The partners schedule overtime and set a cut-off date for new clients. The measure keeps service levels high at the busiest time of year. The partners also keep one weekend free in the final week for urgent cases.
Example
A retailer files its sales tax return each month as well as an annual income tax return. The finance manager prepares a calendar of every deadline in advance. The calendar shows which weeks are heavy and when to assign extra staff. The manager reviews the calendar with the bookkeeper each December.
Case study
Seen in the real world.
Fernhill Bakery is an illustrative, fictional business run by two partners who traditionally dealt with their paperwork in the last week before the deadline. Each year they struggled to find receipts, and each year the accountant charged a rush fee. The last-minute rush also meant mistakes were more likely.
This year they decided to change. They scanned receipts each month, reconciled the bank account quarterly, and sent the accountant a complete package in early February. The accountant welcomed the early start and the clean records.
In this illustrative story, the accountant finished the return in two weeks, saved the partners $400 in fees, and found $1,100 of expenses they would otherwise have missed. They plan to keep the habit all year round. The partners were surprised at how much calmer the spring felt.
Watch out
Common mistakes.
- Leaving everything until the last week, which raises the chance of errors and missed deductions. A calm start also lets you query anything unusual with your adviser.
- Assuming that an extension of time to file is also an extension of time to pay, when tax is usually still due on the original date. Paying an estimate on time avoids most of the interest and penalties.
- Ignoring other deadlines, such as quarterly estimated payments and payroll filings. Keep one calendar with every filing and payment date for the year.
Questions
People also ask.
When does tax season start and end?
It depends on the country and the tax year, so check the dates published by your tax authority. Some countries run a fiscal year that differs from the calendar year, so the season may fall at a different time.
Can I get an extension?
Many systems allow an extension to file, but tax owed is usually still due by the original deadline, with interest if you pay late. Check whether you need to apply for the extension or whether it is automatic.
How can I make tax season less stressful?
Keep digital records throughout the year, reconcile your accounts regularly and start your return early. A simple folder for each month, scanned and labelled, is enough for most households.
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