You may be missing out on IRS money if you don’t meet this Oct. 15 tax deadline

You may be missing out on IRS money if you don’t meet this Oct. 15 tax deadline

Filing for an extension gives taxpayers extra time, but there are some consequences to be aware of. 

Sarah Tew/CNET

Even though tax day was extended to May 17 this year, millions of taxpayers still had to rush to file their 2020 tax return. Some filed for an extension to get more time to gather their records or get professional advice, or even to avoid potential mistakes. But that final tax extension deadline is now approaching. And if you miss the Oct. 15 filing date, you’ll owe late fees or more interest.

Most importantly, if you haven’t yet filed your 2020 tax return, you could be missing out on IRS money, like a tax refund, stimulus checks or child tax credit payments. If you wait too long to file and claim a refund, the IRS says you could risk losing it completely. 

Remember, an extension doesn’t postpone having to pay taxes that you owe, it just gives you extra time to file your return. The IRS is still providing several electronic filing options, including free file for individuals whose income is no more than $72,000. 

We’ll explain below how to know if the deadline applies to you, who gets more time to file and what happens if you miss the October deadline. Here’s how to track your IRS tax refund and what to know about refunds on 2020 unemployment benefits

Do I qualify for a tax extension? 

The IRS will have granted a filing extension if you filed Form 4868 (PDF) either by paper or electronically using e-file before the May 17 filing deadline. You would’ve had to pay all or part of your estimated income tax due using Direct Pay, the Electronic Federal Tax Payment System, or using a debit or credit card, and note that you were filing for an extension.

Some taxpayers are automatically granted more time to file. This includes military personnel who are serving in a combat zone or persons in federally declared disaster areas.

How do I file my 2020 tax return today? 

The IRS says that taxpayers can file and schedule their federal tax payments online, by phone or with the mobile IRS2Go app.

If you need to find a tax software service to use, and you make $72,000 or less, you can find an IRS-approved free filing service easily. You’ll need to gather the following information: income statements (W2s or 1099s); any adjustments to your income; your current filing status (single, married, filing jointly); and dependent information. If you make more than $72,000, you can use the Free File Fillable form.

If you haven’t already made a tax payment, the IRS prefers that payments be made electronically, and offers a variety of ways to do so, including IRS Direct Pay, which is directly linked to a checking or savings account. Another option is by credit card using the mobile IRS2Go app, or through the Electronic Federal Tax Payment System

Now playing:
Watch this:

Your tax questions answered in 3 minutes


Did requesting an extension postpone owing money to the IRS? 

No. Extending your filing deadline to October didn’t delay when you had to pay taxes that you may owe. According to the IRS, you needed to estimate and pay at least 90% of your tax liability by May 17 to avoid late fees. Otherwise, you will have accrued interest on what you owe, which you’ll eventually have to pay — plus possible penalties — on top of your income taxes. 

The late-payment penalty is usually 0.5% per month of the outstanding tax not paid by the filing deadline, maxing out at 25%. The IRS can also issue a late-filing penalty of 5% of the amount due for every month or partial month your tax return is late. If your return is filed more than 60 days after the due date, the minimum late-filing penalty is either $435 or 100% of the unpaid tax (whichever is less). 

For individual taxpayers, penalties and interest will stop accruing only when your balance is paid in full. For more on penalties or to work out a payment plan with the IRS, check out their web page

What does my 2020 tax return have to do with stimulus payments?

If the IRS owes you money from the first two stimulus checks — maybe you didn’t receive either check or received less than you qualified for — you can claim the missing payments through a recovery rebate credit on your 2020 tax form. This holds even if you’re not usually required to file taxes. So the longer you wait to file, the longer it’ll take to get your missing stimulus payment. 

The IRS says it will automatically evaluate your eligibility for the third stimulus check when your 2020 return is processed. If the IRS calculated the amount of your third stimulus payment using your 2019 tax return, you could qualify for more money as a so-called “plus-up payment” once the IRS receives 2020 taxes and recalculates your total. However, until you file a 2020 tax return, the IRS won’t have your new income or dependent information on file. 

The IRS plans to issue eligible taxpayers third stimulus payments and plus-up payments through the end of 2021. 

What does my 2020 tax return have to do with child tax credit money?

The IRS will use your 2020 tax return to determine how much money you qualify for as part of the enhanced child tax credit this year. Advance monthly payments started in July and will continue through December. If you’ve waited until much later to file your 2020 return, the IRS will have used your 2019 tax return to calculate your initial payments. 

If you’ve had a change in income or added a new dependent since that older return was processed, you could get less money than you qualify for this year. Here’s everything to know about the IRS Update Portal, which lets you unenroll from the advance monthly installments and update your household info. 

If you didn’t file your 2019 or 2020 tax return, and you don’t plan to, you could still be eligible for the 2021 child tax credit. You’d have to register on the IRS non-filer portal before Oct. 15. 

Now playing:
Watch this:

Child tax credit: Everything we know


Will my refund be late because of a tax extension?

The timeline for getting your income tax refund — or your refund plus outstanding stimulus money — depends on when you file. Though you have until Oct. 15 to submit your return if you’ve filed an extension, it doesn’t mean you have to wait that long to file.

The IRS is experiencing delays and has a massive backlog of unprocessed returns because of the pandemic, so in some situations, it could take much longer than the average 21 days to issue refunds. Some refunds, especially for more complicated returns or those that need corrections, are taking up to 120 days

How can I check my tax account online?

An easy way to review all your tax-related details, including your address and payment plan details, is to access your IRS account online. According to the IRS, taxpayers can use the information from their account if they need to access their adjusted gross income, find their stimulus payment amounts or review their estimated tax payments or credits. Accessing your tax transcript will give you all the records necessary if you have a tax problem or missing payment. 

If you have any additional questions you can go visit the IRS’ Interactive Tax Assistant to get help. 

For more tax information, here’s an explainer on the difference between a tax refund and a tax return, and here’s why you might want to sign up for direct deposit when you file your taxes.

Learn smart gadget and internet tips and tricks with our entertaining and ingenious how-tos.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *