If you're waiting until the last minute to file your tax return, your time is almost up. Due to COVID-19, the original due date for filing 2020 returns was pushed back from April 15 to May 17. Some groups advocated for an additional delay, but the IRS shot down that idea...which means the deadline to get your taxes done and pay any tax due is fast approaching.
If the impending tax deadline is making you feel a bit stressed out right now, don't worry. Relax, take a deep breath, and continue reading — we have some information that may calm you down.
If you need more time to prepare your return...
You can file for an extension, which will give you until October 15 to file your tax return. Approval is automatic. Use Form 4868 to file your request. Most tax software programs provide this form.
If you're confident you're due a refund...
There's no reason to sweat the tax-filing deadline. The IRS will gladly hold on to your money until you get around to filing your return — if ever.
If you were impacted by a severe storm earlier this year…
If you're the victim of certain storms earlier this year in Alabama, Kentucky, Louisiana, Oklahoma, or Texas, you have even more time beyond the May 17 due date to file your 2020 federal income tax return.
Victims of February's winter storms in Texas, Oklahoma and Louisiana have until June 15 to file their 2020 federal income tax return. For Kentucky residents affected by severe storms on February 27, the due date is now June 30. For victims of severe storms on March 15 in Alabama, the deadline is now August 2.
If you owe taxes...
Filing for an extension gives you more time to file your return, but it doesn't give you more time to pay taxes you owe. If you can't come up with the money by May 17, your bill will be inflated by underpayment fines and interest on the balance until you pay it off.
If you need more time to come up with the money owed...
You can ask the IRS for an additional 120 days to make your payment. There's no fee to set up this agreement, although you'll owe interest and other fees on the balance until it's paid off. Submit a payment agreement application online or call 800-829-1040.
If the amount you owe is large...
Consider requesting an installment plan with the IRS. With an installment plan, you can make monthly payments until the balance is paid off. Taxpayers who owe $50,000 or less can apply online. If you apply online, the setup fee is $149 — but only $31 if you arrange for direct debit from your bank account. If you apply by phone, mail or in person, the setup fee is $225 (or $107 if you have payments debited from your bank account).
Another option is to pay taxes with your credit card. This may appeal to taxpayers who would rather owe money to Visa or American Express than the IRS, especially if they have rewards cards. But while the IRS will accept payments via credit card, it won't pay the "convenience fees" credit card companies charge retailers. In 2021, the fees range from 1.96% to 1.99% of the balance. If you use tax software to e-file, the fees are even higher: TurboTax charges a 2.49% convenience fee. If you don't pay off the balance by the credit card due date, you'll also owe interest.
Don't leave easy money on the table...
The tax reform law nearly doubled the standard deduction, significantly reducing the number of taxpayers who will itemize in the future. But many taxpayers will still need to plug in deductible expenses, such as mortgage interest, state and local taxes (capped at $10,000) and charitable donations to determine whether they're better off itemizing or claiming the standard deduction.
Charitable contributions could put you over the threshold for itemizing, so make sure you get credit for all your good deeds. In addition to deductions of cash contributions, you can also deduct out-of-pocket costs for charitable activities, such as the cost of mileage, parking and tolls in connection with volunteer work. If you donated used clothing or other household items during the year, you can deduct the fair market value of those items, too.
Medical expenses that exceed 7.5% of your adjusted gross income are deductible. That's a high bar, but if you paid for long-term care last year or a family member's serious illness, it's worth gathering your records and receipts. Co-payments, the cost of prescription drugs and treatments that aren't covered by your insurance (including dental and vision care) are all deductible.
If you're simply scrambling to beat the May 17 deadline...
These days, you can file your tax return online in your pajamas at the stroke of midnight on Tax Day, but you may end up paying more to file. Some tax software providers increase their prices as the tax deadline approaches. But if you had income of less than $72,000 in 2020, you can prepare and file your federal tax return for free through the IRS Free File program, which is a partnership between the IRS and private software providers. Some providers include a state tax return, too.
As you rush to fill out your tax return, make sure you don't commit these common errors:
- Wrong Social Security numbers. Make sure the names and SSNs entered for everyone on your return match their Social Security cards. Don't forget to include SSNs for all your dependents; otherwise, the IRS may reduce or disallow any tax benefits (such as the child tax credit) for that dependent.
- Bad account numbers. If you arrange for direct deposit of your refund, triple-check account numbers. Otherwise, your refund could end up in someone else's account.
- No signature. Sign and date your return. If you're filing jointly, your spouse must sign, too.
- E-filing PIN errors. When you e-file your tax return, you're required to sign and validate the return electronically. You'll need to provide your 2019 adjusted gross income or the PIN you selected last year, plus your date of birth. If you use the same tax software you used last year, this shouldn't be a problem. The program will automatically transfer information from last year's return. If you switch to a new program or use one for the first time, you'll need to check your 2019 tax return in order to e-file. It's always a good idea to have last year's tax return on hand when preparing your return, whether or not you e-file. If you misplaced your return, you can find last year's AGI using the IRS's "Get Transcript" tool.)
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May 10, 2021 at 05:00PM
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Tax Tips for Last-Minute Filing - Kiplinger's Personal Finance
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