Tax Deadline Day: What Should You Do If You’re Not Ready?
May 17 is the extended deadline for filing your taxes. If your tax forms are incomplete, or you just haven’t gotten around to doing them yet, it’s time to file for an extension. Before you do, consider that there are pandemic benefits you can lose if you don’t file by midnight tonight.
Here’s what you need to know.
If You Don’t Owe Taxes
If you do not owe money, there is no penalty for not filing, so don’t worry. This might be the case for a lot of people this year.
Important to note: States tax unemployment benefits differently. Some do not withhold tax, meaning you pay taxes on your benefits automatically before you receive them. Others, though, give you the option not to withhold the taxes and receive the full benefit upfront, which means you will have to claim this on your tax return and do owe the tax. It is important to check your state’s specific information on this to avoid mistakenly not paying what’s due.
You have until today to file for an extension, which will then give you until October 15 to send in your return. If it is not done by today, you could get hit with a failure to file a penalty of 5% of the amount owed for each month your return is late. The maximum penalty is 25%, which will remain until the time when the tax is paid in full.
If You Do Owe Taxes
If you owe tax, you still need to pay that money by today. An extension gives you more time to file your return, but if you, let’s say, didn’t have taxes withheld from unemployment benefits, you still need to pay that by today. Failure to pay comes with a 25% max penalty along with interest of the current federal short-term rate plus 3%.
There are also certain pandemic benefits you might miss out on if you don’t file on time. These include the plus-up stimulus payment that the IRS is sending out to taxpayers this year based on 2019 information. If your 2020 income was less than your 2019 income, it could makes you eligible for a higher stimulus that the one you might have already received. This needs to be officially filed though with the IRS in order to receive the benefit.
Taking advantage of the child tax credit might not also be possible if you don’t file by today. If you file in October for example, and are eligible for the extended credit, you would have missed 3 or 4 months of monthly payments because you filed late — that’s assuming they will still be available to late filers.
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