Disclaimer: ClearOne Advantage does not offer tax advice. Please consult with your accountant or tax professional for advice regarding your specific tax situation.
Due to the continuing pandemic and the appearance of new COVID-19 viral strains, the IRS and Treasury Department have announced an extension of the 2020 tax return deadline.
Your 2020 tax deadline is May 17, 2021. May 17 falls on a Monday, so you will have no additional days to prepare your return and make your payments as happens sometimes due to weekends or holidays.
Estimated quarterly taxes, however, are still due on April 15, 2021.
Last year, due to the economic disruptions COVID-19 caused, the IRS granted an automatic extension until July 15 for all individuals, corporations, and trusts.
The IRS started accepting and processing tax returns on February 12 this year, in a departure from its usual schedule. This discrepancy resulted from stimulus legislation passed in December that included some updates to the tax code.
What the deadline means for you is that interest and penalties begin to accrue for unpaid taxes starting May 18, 2021.
What Happens if You Miss the 2020 Tax Deadline?
If you know ahead of time that you will miss the deadline to file 2020 taxes, you can apply for an extension. The sooner you file this application, the better.
If approved, this application grants you an extension until October 15, 2021. The form you need to fill out to file for an extension is Form 4868.
Be aware that the successful extension of your time to file does not extend the deadline for your time to pay your taxes.
- You do not qualify for this extension if a court order compels you to file by the due date or you want the IRS to figure out your taxes.
- Make sure that you file for an extension before Tax Day and that you request an extension until October 15, 2021.
- The extension does not allow you to pay your taxes later. You have to estimate your taxes as accurately as possible using the information at your disposal and send the payment with your extension application.
- Your extension may still be approved without payment. In that case, you will incur interest and penalties for the late payment. The interest/penalty clock starts ticking on May 18, 2021.
- The extension will give you until October 15, 2021, to file your tax return.
- Depending on your state, your federal filing extension may automatically apply for your state taxes as well.
- The IRS only notifies you if it denies your extension.
What Happens if You Do Not File by the New Due Data?
Not being able to pay your taxes on May 17 is one thing. Not filing a tax return is another.
If you fail to file a return or an application for an extension by tax deadline 2020, according to the Taxpayer First Act of 2019, you will have to pay a $330 failure-to-file penalty.
It makes sense to file your return or extension application, even if you know you cannot make the payment. The penalties on late payment are smaller than the penalty for late filing.
In special cases, the IRS may grant you additional time to file. Such exceptions may apply if:
- You are in the military, serving in a combat zone.
- You are in a federally declared disaster area.
File your tax return or extension application by May 17, and pay as much of your 2020 tax liabilities as you can. That is the best practice. It can help you avoid interest and penalties and may even qualify you for some form of tax debt relief.
What About State Tax Filing Deadlines?
It is important to note that not all states follow the same filing deadlines as the federal government. That means that you should check with your state tax authority to see if the due dates for state taxes have been changed.
Where to Find Debt Relief
What should you do if you paid your taxes with a credit card and are now unable to pay off your credit card debt? ClearOne Advantage can help with that. Call our Certified Debt Specialists at 866-481-1597 to learn what your credit card relief options are.
Debt settlement can save you money while paying off your accounts. It is a debt relief option that shaves amounts off your principal, leaving you with less to pay off. To make sure you deal with your credit card debt optimally, get a personalized debt relief plan.
