There’s a reason so many Americans dread the month of April. That’s when taxes are typically due (there was an exception in 2020 as well as this year because of the pandemic), and many filers routinely find themselves scrambling to meet that deadline.
In fact, some people don’t manage to file their taxes on time, and those who land in that boat can request a tax extension. The IRS is very flexible in this regard. You don’t need a specific reason to ask for more time to get your taxes done. All you need to do is request an extension by the original filing deadline, and you’ll be granted an extra six months to get your return in.
If you filed a tax extension this past spring, then the deadline to get your return into the IRS is rapidly approaching. And if you don’t meet it, you could face some serious penalties.
Get that return in soon
If you got an extension, the deadline to submit your tax return is October 15. And sticking to it would be wise.
If you don’t file your taxes in time, you could be hit with a failure-to-file penalty. That penalty equals 5% of your unpaid tax bill for each month or partial month your return is late, up to 25%.
Additionally, if you owe the IRS taxes and haven’t paid, you should know that you’ve already been racking up interest dating back to the original filing deadline. And so if you don’t get your return in by mid-October and your taxes continue to go unpaid, you’ll rack up even more interest, plus penalties for being late with your payment.
Even if you’re convinced you’re owed money from the IRS, it still pays to get your tax return in by October 15. The more you delay, the longer you’ll hold up your refund.
Do you need tax help?
A big reason so many people routinely put off their taxes is that their financial situations are complicated and they’re not sure how to complete their returns. If you’re not sure how to get your 2020 taxes done, your best bet is to reach out to a tax professional as soon as possible.
Now there are a few exceptions to that October 15 deadline. Those living in federally declared disaster areas, such as those impacted by Hurricane Ida, may get more time to submit their taxes. But otherwise, it’s best to get moving on your tax return to avoid unfavorable financial consequences.
“Thousands of taxpayers who filed an extension for their 2020 income taxes will risk complications and penalties from the IRS if they miss the deadline on October 15,” says Mark Steber, Chief Tax Information Officer at Jackson Hewitt. “Tax year 2020 was unprecedented in complexity from law changes, life changes, and changes from the pandemic that impacted millions in ways never seen before for taxes. It’s never too late to work with a tax pro on any questions you may have about your taxes.”
Furthermore, Steber urges taxpayers to start thinking about next year’s taxes now. Obviously, the first priority should be to submit any unfiled 2020 returns by the October 15 deadline. But from there, it wouldn’t hurt to strategize for a smoother filing in 2022.
There are different moves filers can make to lower their 2021 tax burden and score higher refunds in 2022. These including taking losses on investments strategically and ramping up charitable contributions before the current year comes to a close.
Maxing out retirement plan contributions for the current year is another smart bet. The same applies to fully funding health savings accounts. Filers have many options for lowering their tax burden, and the sooner you start exploring yours, the better.
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