It’s almost here. Tax Day 2020.
If you took advantage of the three-month tax filing delay due to the COVID-19 pandemic, time to file – and pay – is almost up. Taxpayers must file or seek an extension by July 15 or face a penalty.
The IRS is expecting about 150 million returns from individuals. As of last count, it had received almost 139 million.
Taxpayers who need more time can request an extension on the IRS website. That will give them until October 15 to file. However, an extension to file does not mean added time to pay. If you are planning to file later, estimate what you will owe and make that payment by July 15.
Here are brief answers to some other common questions taxpayers might have:
What do I do if I can’t pay?
Go ahead and file your taxes even if you cannot pay. The IRS is willing to set up payment plans or make other arrangements with taxpayers who cannot pay in full. Many of those can be set up online. The penalty for failure to file may be much more expensive than the failure to pay.
What about my refund?
The IRS is still processing and issuing refunds, most within three weeks. Those getting refunds will be paid interest, dating back to April 15, if they file on time. The interest rate is 5% per year through June 30. Starting July 1, it dropped to 3% per year. The interest is compounded daily for refunds. Any refund issued after July 1 will get a blended rate.
Can I file and pay online?
You can file or pay your taxes online. The IRS urges taxpayers to use electronic options to support social distancing and speed the processing of returns, refunds or payments. The agency is still working its way through a backlog of mail that built up during its closure in response to the pandemic.
What about estimated taxes?
Taxpayers who make estimated quarterly tax payments have until July 15 to make the payments for the first and second quarters. Those were originally due on April 15 and June 15, respectively.
One more note
July 15 is also the deadline to claim a refund for 2016 tax returns. An estimated $1.5 billion in refunds for 2016 are sitting unclaimed because people failed to file tax returns. The law provides a three-year window of opportunity to claim a refund. But if taxpayers do not file a return within that time, the money becomes property of the Treasury. There is no penalty to file a later return if a refund is due.
There are a host of other tax deadlines linked to July 15. Check out the IRS website or contact our Salem office at 330-332-4646 or East Liverpool office at 330-385-2160.