The long-delayed Tax Day 2020 came and went yesterday and you weren't part of it.
Maybe you were distracted by COVID-19 worries or financial concerns brought about by the pandemic. I get it. Family crammed together for weeks, savings are running low and every ache sends you online to check coronavirus symptoms. Taxes just don't seem that important.
But Uncle Sam and his tax folks are back at their jobs and they're doing them. To ensure that you don't run too afoul of the Internal Revenue Service, here are four steps you need to take as soon as possible. Like now.
1. File something, either a return or an extension request.
Yes, the filing deadline is over. But still get the IRS your Form 1040 or Form 4868 to give you until Oct. 15 to finish your return.
Why the rush? The penalty and interest meter for not filing on time started running when the clock clicked over to 12:01 a.m. July 16. The sooner the IRS gets some official paperwork from you, the sooner you can stop that amount from accruing.
Plus, getting your 1040 or 4868 into the system will prove to the IRS that you know you have a tax responsibility and you're doing your best to fulfill it.
If you're ready to finally file your 2019 return, check out these Form 1040 final weekend filing tips. If you do need more time to fill out the form property, then here's the scoop on submitting Form 4868.
The fastest way to submit either form is electronically. You can even do so for free with, what else, Free File if your adjusted gross income is $69,000 or less.
2. Pay what you can.
Now here's the dirty little not-so-secret filing deadline double whammy. While Tax Day every year is the date you must submit your return (or file for an extension), it's also the day you must pay any tax you owe. The IRS offers a variety of ways to pay your tax bill.
Just like with non-filing, the IRS assesses additional penalties and interest on unpaid tax bills. And just like with the non-filing ones, the non-payment penalties started adding up when July 16 started.
If you didn't file because you can't come up with the full bill right now (damn you, COVID-19 layoffs!), pay what you can. Any amount will help reduce the associated penalties and interest.
3. Set up a payment plan.
If your tax bill is really big, consider an IRS payment plan.
If you owe less than $10,000 then the IRS usually automatically approves your payment plan as a guaranteed installment agreement. This means that as long as you promise to pay off your balance within three years, there is no specific minimum payment required.
4. File your state returns, too.
Chances are that if you missed the July 15 federal tax filing (and paying) deadline, you didn't file your state taxes either. Most of the 43 states and District of Columbia that collect some form of income taxes from their residents use those taxpayers' federal returns as the basis for state filings. And most of those states also wanted their separate tax returns yesterday, too.
Each state has its own rules and penalties for late- and non-filers, but they all mean that the longer you put off that tax task, the more you'll owe your state tax collector, too.
Check with your state tax department about the steps you need to take here to reduce those penalties.
Don't owe? Don't worry: If you don't owe the U.S. Treasury any taxes and didn't file your return, don't panic.
Although the IRS still wants your tax paperwork, your non-filing won't cost you. Penalties are assessed based on any tax you owe. And the interest charge on $0 tax due is obviously $0. Even I can do that math without a calculator!
But the odds of getting to a zero tax bill at filing time, either through the taxes taken out of your paychecks throughout the year and/or any estimated tax payments you made, are greater than hitting a Las Vegas jackpot, which by the way, also is taxable income.
That's why almost every taxpayer — heck, I'll bet all my savings that we can dispense with the "almost" qualifier and happily pay tax on those winnings — either owes at filing time or is due a refund.
If you owe, take care of it as expeditiously as you can, to both get off the IRS' radar and limit the extra late-filing and non-payment penalties and interest.
File for your refund: And if you're due a refund, what are you waiting for?!
The IRS isn't going to automatically send you your tax payment overage. You have to ask for your money by, you got it, filing a tax return. Again ASAP. Like now.
Plus, there are other reasons to file a tax return when you don't legally have to do so.
So regardless of whether you owe or are getting a refund, the bottom line is the same. Finish that 1040 and associated schedules and forms and get them to the IRS and, depending on where you live, your state tax office, too, as quickly as you can.
With taxes, it truly is better late than never.
You also might find these items of interest:
- Last-minute tax breaks and filing advice
- IRS' COVID-19 tax payment postponements also end July 15
- How to make the 2 estimated tax payments also due July 15