Thursday, August 11, 2022

What If I Miss Tax Day

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How Do I Get A Tax Extension

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First, you’ll have to request an extension by April 18 or you could face a “failure to file” penalty, the IRS said. The good news is that the extension is automatic, but you’ll still need to take the first step of filing some paperwork with the IRS.

To ask for an extension, you’ll need to fill out Form 4868. This is a one-page form that asks for basic information such as your name, address and Social Security number. It also asks you to estimate how much you owe in taxes.

This form can also be used through the IRS’ Free File service, and can be used regardless of income. Typically, only people with adjusted gross income below $73,000 can use the Free File service, but anyone can use it to ask for an extension, the IRS said.

File As Soon As You Can

If you owe money, youll want to file as soon as you can to avoid further penalties. Although you may have a penalty for filing late, your penalty will be smaller than if you dont file at all. Filing as soon as possible will reduce what you owe in interest. The longer you wait to file, the bigger the interest penalty.

The IRS also received copies of your tax forms like 1099-NECor W-2 forms, which reflect your income earned for the year. You want to file as soon as possible so they dont show that you owe more taxes since they dont know all of the tax deductions and credits you qualify for. TurboTax will check and see if youre eligible for over 350 tax deductions and credits based on your entries.

You may also have a tax refund waiting. While you wont receive a tax penalty if you have a refund coming, every year the IRS reports over $1 billion dollars in unclaimed tax refunds because people dont think they made enough money to file their taxes. Even if you made under the IRS income threshold for filing , you should file if you had federal taxes withheld from your wages or you are eligible for tax credits like the Earned Income Tax Credit or the Recovery Rebate Credit. If you do not file your taxes and you are entitled to a tax refund, you have toclaim your tax refund within three years of the tax return due date.

You also need to file if you received an advanced premium tax credit to help you pay for health insurance in the Health Insurance Marketplace.

If You Owe Uncle Sam Money Filing Your Tax Return Late Can Cost You Big Bucks

If you didn’t file your 2021 federal tax return or request an extension by April 18 , don’t let that stop you from completing your 1040 and paying your tax as soon as possible if you owe the IRS money. If you can’t file your return, at least pay what you can now. Acting quickly will help keep the penalties and interest you may owe from getting out of hand.

Some people may have more time to file their tax returns and pay any taxes due. For example, filing and payment deadlines are later for some disaster victims, Americans living overseas, and military personnel . But if the special rules for these taxpayers don’t apply to you, then it’s time to stop procrastinating.

You can still file your tax return for free after the April 18 deadline. If your 2021 federal adjusted gross income is $73,000 or less, you can use the IRS’s Free File program up until October 17. If your income is too high for the Free File program and you’re comfortable doing your own taxes, you can also use the IRS’s Free File Fillable Forms until October 17. These are electronic versions of paper tax forms, and some of the math is done automatically.

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Avoid Interruptions To Your Benefit And Credit Payments

Filing your tax return before the deadline is essential to make sure to avoid interruptions to any credit and benefit payments you are eligible for. It also makes sure that you get your refund on time, if applicable.

Get your refund faster and avoid any delays by signing up for direct deposit and filing your return online. Our Get ready to do your taxes web page has information about online filing, deadlines, and other helpful links.

To save time, you should gather all your tax slips and supporting documents before you file. You can quickly view some of your slips online in My Account. When you register for My Account, you can also update your personal information. This includes your address, marital status, direct deposit information, and more! Save time and use My Account to update this information instead of calling us.

Failure To Pay Penalty

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When you dont pay the taxes reported on your return in full by the April 15 due date , the IRS charges a failure to pay penalty. The penalty is 0.5% of the tax not paid by the due date.

This late payment penalty applies every month or part of a month that your payment is late until your tax bill is paid in full or until the penalty reaches 25% of the tax owed.

For example, say you filed your 2020 return that was due on May 17, 2021, on June 30, 2021, and your return had a balance due of $500, which you paid on the same date. The IRS would charge both failure to file and failure to pay penalties for two months .

The penalties would be calculated as follows:

Failure to File Penalty
$50.00

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Tax Tips For Homeowners

  • Energy efficiency tax credits: The IRS offers taxpayers a 30% tax credit for home improvements that generate energy, including solar panels, solar water heaters, wind turbines, fuel cells, and geothermal heat pumps. These credits are good through the end of 2021. Green energy tax breaks not only save you money on daily expenses, but they also save you money on your taxes. Combine these federal tax credits with available state tax credits, and rebates and youll save even more on your purchases.
  • Qualified medical home improvement deductions: The IRS allows homeowners to deduct the cost of home improvements that are deemed necessary for medical reasons (such as a ramp, widening doorways for wheelchair access, adding handrails, and similar home improvements.
  • Home Office Deductions: No matter if you run your own business from home or work for someone else, there are qualified home office tax deductions that you can claim when you use any portion of your residence in connection with a trade or business.
  • Your Home Office Space: You must use a specific room or identifiable space as your office. The only exception to this exclusive use rule is when you use part of your home for business storage purposes or as a daycare facility.
  • Tip: Most of the top tax software programs will help you identify these deductions when you prepare your tax return.

If Youre Due A Tax Refund

If you are owed a refund from the IRS, there is no penalty for filing your return late. But that doesnt mean you should take your time.

You have three years from the return due date to claim a tax refund due to tax withheld, estimated taxes paid, or refundable credits. That means that for 2018 returns, the window closes on April 15, 2022. After three years, unclaimed refunds become the property of the U.S. Treasury.

Think youd never procrastinate on your tax filing obligations for so long? Over a million people do every year. Each year, the IRS makes a media push to get delinquent filers in compliance by announcing the billions of dollars in unclaimed refunds taxpayers are about to forfeit.

In July 2020, the agency had income tax refunds totaling almost $1.5 billion waiting for an estimated 1.4 million taxpayers who did not file a 2016 Form 1040. The IRS estimated the median refund to be around $861.

While that deadline might seem like a long way off now, the tax filing deadline will be here in no time. Its a good idea to get any delinquent tax returns squared away now before your tax filing obligations start piling up.

Start filing your taxes today using tax software from H& R Block and claim the refund youre owed.

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Do I Have To File An Extension With My State

That depends. Once you’ve requested an extension from the feds, check if you’ll need to do so for your state. According to the IRS, “State filing and payment deadlines vary and are not always the same as the Federal filing and payment deadline.”

Some states will automatically give you an extension on your state taxes if you receive a federal extension. In other states, you’ll need to request an extension separately. The Federation of Tax Administrators offers a rundown of how to check for tax information for the state you live in.

If you live in one of the nine states without personal income tax, you’re likely in the clear. However, two of those states New Hampshire and Tennessee still tax investment income, so, if you have earnings from dividends, stock sales or other investments, you may still have to file a state tax return in those states.

Federal Tax Rates Standard Deductions & Capital Gains

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How your income is taxed varies based on how much income you have, how you earned it, and other factors.

While a flat tax has been talked about , the current U.S. tax system is actually a graduated scale where one who earns more pays more.

There are also standard deductions you can take when filing your taxes. These standard deductions can reduce the amount of income taxes you owe.

The United States uses a or a gradual tax system. The marginal tax rate means each additional dollar you earn is taxed at the rate which falls within your income tax bracket.

The tax code has operated like this for decades, even though the rates themselves have changed several times, and has had many other one-time changes, like an economic stimulus check when the economy was doing poorly in 2008.

Finally, the government may tax capital gains differently than earned income. Capital gains are investment gains.

Lets look at each of these to see how they impact your tax obligations.

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Will The Irs Notice If You File Late

Even though there are multiple reasons to file your taxes early, the IRS still receives millions of tax returns at the last minute. So you may be wondering if they’ll even notice that yours is a day late.

The real question you should be asking yourself is: Why risk it? Plus, if you mail in your return, the IRS can see the postmarked date on the envelope, so you could very well receive a bill for a small amount if you’re a few days past due.

So if youâre going to be late , make sure to file for an automatic extension. While you’ll still have to fill out and file as much of your 1040 as you can , you’ll have until mid-October to finish the tax-filing process.

This publication is not intended as legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.

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What Happens If I Owe Taxes

If you owe taxes to the CRA, payments are due with your tax return on May 2, 2022.After this deadline, late fees and interest charges may begin to apply. If you owe money to the CRA after missing the tax deadline and cant pay your debt in full, you can always set up a payment arrangement with the CRA.

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I Missed The Deadline To File My Taxes Can I File For A Tax Extension

Yes but only as long as you request to file to file an extension by tax deadline day. Extension requests must be filed no later that the regular due date of your return, the IRS states on its website.

In other words, the request to file an extension, and the 2022 tax deadline is on the same day: This year, that day is April 18.

Taxpayer Relief For Exceptional Circumstances

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If you are filing your taxes late because of circumstances beyond your control, don’t panic the Canada Revenue Agency may waive the late-filing penalty and applicable interest. You can get more information about this in the CRA’s circular IC07-1: Taxpayer Relief Provisions.

To make a request for relief from penalties or interest you can fill in and submit Form RC4288 Request for Taxpayer Relief – Cancel or Waive Penalties or Interest. Examples of exceptional circumstances include:

  • You have suffered a serious illness or accident
  • You are undergoing emotional distress from a divorce or death of a family member
  • You have suffered a disaster such as a fire, flood, or earthquake
  • If you are communicating by mail, disruption via a postal strike

You may also avoid penalties and interest if the delay is a result of actions by the CRA, including:

  • Processing errors by the CRA
  • Incomplete or incorrect information on the return, resulting in corrections or requests for additional information by the CRA
  • Delays in processing resulting in a late assessment of amounts owing
  • Delays resulting from reviews, audits, objections, or appeals

The CRA recommends that you use Form RC376 Taxpayer Relief Request – Statement of Income and Expenses and Assets and Liabilities for Individuals for this purpose. This form should be submitted along with Form RC4288 either online using My Account or My Business Account, or by mail to your nearest tax service office.

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What Happens If You Can’t Afford To Pay Your Taxes When You File

If you can’t pay your taxes when you file your taxes, you might get hit with a Failure to Pay Penalty.

According to the IRS, “The Failure to Pay Penalty applies if you dont pay the tax you report on your tax return by the due date or approved extended due date. The penalty you must pay is a percentage of the taxes you didnt pay.

However, if you aren’t able to pay your taxes on the day they are due, you may qualify for an online payment plan that allows you to pay off an outstanding balance over time.

Once your online application is complete, you’ll receive immediate notification of whether your payment plan has been approved.

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Those payment plans can include:

  • Short-term payment plan The payment period is 120 days or less and the total amount owed is less than $100,000 in combined tax, penalties and interest.
  • Long-term payment plan The payment period is longer than 120 days, paid in monthly payments, and the amount owed is less than $50,000 in combined tax, penalties and interest.

What If You Can’t Pay Your Taxes

If you didn’t file your tax return because you can’t pay your taxes, the IRS has a couple of options for you. For instance, you can go online and request a payment plan that allows you to pay the tax you owe over time. Short-term online plans offer payment periods of up to 180 days if the combined tax, penalties and interest you owe is less than $100,000. Longer-term online payment plans, which require monthly payments, are available if the total amount owed is less than $50,000 .

If you don’t qualify for an online payment plan, you can ask the IRS for an installment agreement by filing Form 9465. Depending on your income, a set-up fee may apply if the IRS approves your agreement. The IRS typically responds to installment agreement requests within 30 days.

Another option is to request an offer in compromise . Generally, with an OIC, you agree to pay a reduced amount of tax. However, before the IRS will consider an OIC, you must file all tax returns due and make any estimated tax payments required for the current year. The IRS generally approves an OIC if it thinks the amount you offer is the most it can reasonable expect to collect.

You might also be able to get the IRS to temporarily suspend collection of your tax debt if you’re facing a financial hardship . This does not mean that your tax debt goes away, though. And penalties and interest continue to accrue until your debt is paid in full.

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Penalty For Filing Your Tax Return Late

If you file your tax return after the due date and have a balance owing, you will be charged a late-filing penalty. Filing late may also cause delays to your benefits and credit payments.

If you cannot pay your balance owing, you should still file on time to avoid being charged the late-filing penalty.

The late-filing penalty is 5% of your 2020 balance owing, plus an additional 1% for each full month you file after the due date, to a maximum of 12 months.

If the CRA charged a late-filing penalty for 2017, 2018, or 2019 and requested a formal demand for a return, your late-filing penalty for 2020 will be 10% of your balance owing. You will be charged an additional 2% for each full month you file after the due date, to a maximum of 20 months.

Late filing penalties still apply even if you are eligible to get interest relief if you received COVID-19 benefits.

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