The month of April is a reason for many Americans to panic. That’s when taxes are usually exhausted (in 2020 as well as this year, with the exception of epidemics), and many filers regularly find themselves struggling to meet those deadlines.
In fact, some people are not able to pay their taxes on time and those who get on the boat may request a tax increase. The IRS is very flexible in this regard. You don’t need a specific reason to ask for more time to pay your taxes. All you have to do is request an extension to the original filing deadline and you will be given an additional six months to receive your refund.
If you filed a tax extension last spring, your IRS deadline is fast approaching. And if you don’t, you could face serious penalties.
Get that return early
If you have received an extension, the deadline to file your tax return is October 15. And it would be wise to stick to it.
If you do not pay your taxes on time, you may face a file-to-file penalty. This penalty is up to 5% of your unpaid tax bill for each month or up to 25% of your late return.
In addition, if you have IRS tax and you have not paid, you should know that you have already increased the interest from the original filing deadline. And so if you do not receive your refund by mid-October and your taxes remain unpaid, you will be charged further interest, as well as a penalty for late payment.
Even if you are sure you have money from the IRS, they still pay to get your tax refund by October 15th. The longer you delay, the longer you will withhold your return.
Do you need tax help?
A big reason many people pay taxes regularly is because their financial situation is complicated and they are not sure how to complete the return. If you are not sure how to get your 2020 tax, your best bet is to contact tax professionals as soon as possible.
Now there are some exceptions to the October 15 deadline. Those living in federally declared disaster areas, such as those affected by Hurricane Ida, may have more time to collect taxes. But otherwise, it is better to go for your tax return to avoid adverse financial consequences.
“Thousands of taxpayers who have applied for an 2020 income tax return will be at risk of complications and penalties from the IRS,” says Mark Steiber, Jackson Hewitt’s chief tax information officer. “The tax year 2020 has been unprecedented due to changes in the law, changes in life and epidemics that have affected millions of people never before seen for taxes. It is never too late to work with tax advocates on any of your tax issues.”
Furthermore, Steeber urges taxpayers to start thinking about next year’s taxes now. Of course, the first priority should be to submit any incomplete 2020 returns by the October 15 deadline. But from there, strategies for smooth filing in 2022 won’t hurt.
Filers can make a variety of moves to reduce the tax burden in 2021 and get higher returns in 2022. This includes strategically damaging investments and increasing charitable contributions before the end of the current year.
Increasing the contribution of the retirement plan for the current year is another smart bet. The same applies to fully funding health savings accounts. Filers have many options to reduce their tax burden and the sooner you start your search the better.
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Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No The Money Circles journalist was involved in the writing and production of this article.