The COVID-19 pandemic forced the usual April 15 tax filing deadline to be pushed back, but the new July 15 deadline is now rapidly approaching.
Pushing back the due date provided some economic and logistic relief to taxpayers who were dealing with a disruption in everyday life, as well as the agonizing uncertainty that came along with the pandemic.
The IRS is expecting about 150 million returns from individuals and as of last count, it had received almost 139 million.
Here are a few things you might want to know about the deadline:
Taxpayers who need more time can request an extension on the IRS website. That will give them until Oct. 15 to file.
However, an extension to file does not mean added time to pay. Those planning on filing later should estimate what they owe and make that payment by July 15.
Go ahead and file your taxes even if you cannot pay.
The IRS is willing to set up payment plans or make other arrangements with taxpayers who cannot pay in full. Many of those payment plans can be set up online. Plus, the penalty for failure to file will be much more expensive than the failure to pay, said Kathy Pickering, chief tax officer at H&R Block.
The IRS is still processing and issuing refunds, most within 21 days.
Those getting refunds will be paid interest, dating back to April 15, if they file on time. The interest rate is 5% per year through June 30. Starting July 1, it drops to 3% per year. The interest is compounded daily for refunds. Any refund issued after July 1 will get a blended rate.
You can file or pay your taxes online.
The IRS urges taxpayers to use electronic options to support social distancing and speed the processing of returns, refunds or payments. The agency is still working its way through a backlog of mail that built up during its closure in response to the pandemic.
Accountants and tax preparation services say they have a variety of means to help people prepare their taxes without meeting face-to-face.
Taxpayers who make estimated quarterly tax payments have until July 15 to make the payments for the first and second quarters.
Estimated quarterly tax payments for the first and second quarters were originally due on April 15 and June 15, respectively.
July 15 is also the deadline to claim a refund for 2016 tax returns, according to the IRS.
An estimated $1.5 billion refunds for 2016 are sitting unclaimed because people failed to file tax returns. The law provides a three-year window of opportunity to claim a refund. But if taxpayers do not file a return within that time, the money becomes property of the Treasury. There is no penalty to file a later return if a refund is due.
It’s also a good time to check in with a tax professional if you have had a major shift in income, employment, or other tax situations in 2020. With all the changes stemming from the COVID-19 pandemic, there may be need for added help when it comes to taxes.
“Reach out to (your tax professional) about what 2020 is going to look like,” says Michael Eisenberg, a CPA, and attorney at Squar Milner in Los Angeles.
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