May 17th Was Tax Day And The Tax Extension Deadline: What To Know About Filing Late, IRS Penalties

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Tax Day was Monday, May 17th!

Here are some things to know if you filed an extension.

If you missed the cutoff to file your taxes, you could also be missing out on some extra money related to stimulus payments and the child tax credit. Yet if you knew you couldn’t complete your taxes in time, you should have equested an extension, which gives you until Oct. 15 to file your tax return. You don’t have to give the IRS (or anyone else) a reason why you need more time to file.

A filing extension doesn’t postpone having to pay taxes that you owe, and the IRS may impose penalties and interest to remaining unpaid balances after Monday. An extension could also delay your tax refunda plus-up stimulus payment or money from the first and second stimulus checks you need to claim this year. An extension could also affect the amount of your child tax credit payment— if you qualify for one.

If you end up filing later, it may take longer to get your tax refund, but tracking your combined refund and stimulus payment can help. We can also tell you about the new child tax credit payments, including how much you might get, as well as which families are eligible (including dependents).

Three Ways A Tax Extension Could Have Been Filed

Filing for an extension would help avoid monthly penalties that the IRS may impose on late tax returns. There are three ways the IRS says you can file a tax extension:

Option 1: 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’ve filed for an extension.

Option 2: File Form 4868 (PDF) electronically by accessing IRS e-file using your tax software or by working with a tax professional that uses e-file. Make sure you have a copy of your 2019 tax return.

If you need to find a tax software service to use, and you make $72,000 or less, you can use the IRS Free File Online tool to find an IRS-approved free filing service. 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.

Once you enter all your information, the IRS will help determine which option is best for you — for example, it could be the IRS Free File Program by TurboTax or TaxSlayer.

Option 3: File a paper Form 4868 and enclose payment of your estimate of tax due. Make sure it’s postmarked on or before May 17.

Does Filing An Extension Postpone The Money I Owe To The IRS?

No. Extending your filing deadline to October doesn’t delay when you have to pay taxes you may owe. According to the IRS, you need to estimate and pay any owed taxes by May 17 to avoid late fees. Otherwise, you may accrue interest on what you owe, which you’ll eventually have to pay — plus possible penalties — on top of your income taxes.

For individual taxpayers, penalties and interest will stop accruing only when your balance is paid in full.

How Will Filing An Extension Affect Eligibility For A Plus-Up Payment?

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. If you file a tax extension, it will further delay your full payment.

Will Filing Taxes Late Reduce The Amount Of My Child Tax Credit Payments In 2021?

The IRS will use your 2020 tax return to determine how much money you qualify for as part of the expanded child tax credit this year. If you wait till October to file, the IRS may use an older tax return to calculate your payments. If a change in income or a new dependent is not reflected on that older return, you could get less money than you qualify for this year. Know that you may be able to update your information in an child tax credit portal the IRS plans to roll out in July.

Will I Still Be Able To Claim Missing 2020 Stimulus Money If I Filed For An Extension?

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.

Will My Refund Be Delayed If I Filed A Tax Extension?

The timeline for getting your income tax refund — or your refund plus outstanding stimulus money — depends on when you file. While 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.

For example, if you file by the May 17 deadline, you could receive your money as soon as May 24. However, if you wait until Oct. 15, the earliest you would get money back is Oct. 22. The IRS is experiencing delays providing some services because of the pandemic, so in some situations, it could take longer to receive your money. See our chart below for more details on when you can expect your tax refund.

WHEN TO EXPECT YOUR TAX REFUND

If you file on this date This is the soonest This is the latest
May 17 (last day to file) May 24 June 7
Oct. 15 (last day with extension) Oct. 22 Nov. 5

 

Source: c/net

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