For some taxpayers, the most frightening day in October arrives weeks before Halloween.
This date that haunts taxpayers falls on Oct. 15, which is the last day to file a 2020 federal tax return if an extension past the general deadline (May 15 this year) was filed. Many states follow the federal government's filing deadlines; check with your own state's department of revenue to ensure you meet their deadline.
With Oct. 15 looming, here are some answers to questions you might have about the Internal Revenue Service's (IRS) extension deadline:
How do I file?
Electronic filing, known as e-filing, is available to most taxpayers and is easy, safe, and the most accurate way to file, the IRS reports. Filing electronically can also help determine earned income tax credits, child and dependent care credit, and recovery rebate credit.
The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe or increase your refund.
The child and dependent care credit provides a potential tax credit for payments made to someone who cared for a child or other qualifying person so you (and your spouse if filing jointly) could work or look for work.
The 2020 recovery rebate applies to anyone who did not receive the first and second economic impact payment, or got less than the full amount. To receive this credit, you must file a 2020 tax return even if you don’t usually file.
What happens if I don’t file?
If you miss the deadline, you can face a failure-to-file penalty, which is 5 percent of the unpaid taxes for each month that your return is late, up to 25 percent of your unpaid taxes. Ouch! So do everything you can to get your tax return filed by the extension deadline of October 15.
What if I am getting a refund?
File as soon as possible and use direct deposit to get that money deposited into your financial account for free. You will not be penalized for filing a late return if you are due a refund. Learn more about how to set up direct deposit with the IRS.
What if I can’t pay my full balance?
Don’t panic, but don’t ignore the issue either. Pay as much as you can to reduce interest and penalties. The IRS offers payment plans of various types for people who can’t pay in full. Learn more on the IRS's website.
What if I didn’t request an extension by May 17?
File and pay as soon as possible, to avoid additional penalties and interest.
What if I am in the military?
Special deadline exceptions may apply, depending on circumstances. Learn more at https://www.irs.gov/newsroom/extension-of-deadlines-combat-zone-service
How can I avoid needing an extension next year?
Make it a priority to plan ahead this year. April 15, the traditional filing deadline, is only six months away from the extension date. Some people can pay their taxes in advance, in estimated form, to avoid the sticker shock in May or October. Talk to a financial planner or hire an accountant if you are a paperwork procrastinator.*
*This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax advice. Please consult tax professionals for specific information regarding your individual situation.
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