What If You Cant Pay Your Taxes
File your return anyway, and immediately apply for a payment plan if you can’t pay the tax you owe all at once. The IRS will generally let you pay over time, as long as you make arrangements to do so.
Go to IRS Direct Pay and have the payment debited directly from your bank account if you owe money and don’t want to send a check to the IRS via snail mail, risking the extra time that might entail.
Income Tax Deadline Extension
The individual income tax payment and filing deadline has been extended by 32 days to May 17, 2021, without penalties and interest, regardless of the amount owed. This extension will be similar to the Internal Revenue Service extension.
Individuals will have the option to pay any 2020 income tax payments that would normally be due on April 15, 2021, by May 17, 2021, without penalty or interest. This extension applies to money owed by individual taxpayers only for the 2020 income tax year.
Individual taxpayers do not need to file any forms or call the Colorado Department of Revenue to qualify for this automatic state tax payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline are automatically granted a filing extension until Oct. 15, but that does not grant an extension of time to pay taxes due. Individual taxpayers should pay their state income tax due by May 17, 2021, to avoid interest and penalties.
Individuals that received unemployment benefits in 2020 and already filed their federal return should continue to monitor guidance from the IRS in the coming days with the recent passage of the American Rescue Plan.
How To File Your Federal Income Taxes
Many individuals work with a tax professional or use tax preparation software to file their income taxes. Another option is the Free File Program offered by the IRS. If your adjusted gross income is $72,000 or less, Free File offers tax preparation services through a partner site at no cost. If your AGI is above $72,000, you can use IRS Free File to prepare your own taxes online for free.
If youre expecting a refund, then youll want to file electronically if possible. Individuals who do so typically receive their refund within three weeks of when the IRS received it. You can also choose to mail a paper return to the IRS, but it may take six to eight weeks to process.
However, the COVID-19 pandemic has caused considerable delays in processing paper returns.
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Contribute To Or Open An Ira By Tax Day
Contributions to a traditional IRA can be tax-deductible. You have until the May 17, 2021, tax deadline to contribute to an IRA, either Roth or traditional, for the 2020 tax year. The maximum contribution amount for either type of IRA is $6,000 or $7,000 if you’re age 50 or older. See all the rules here.
» MORE: Learn how IRAs work and where to get one
Special Tax Extensions For Winter Storm Victims
The IRS is giving victims of the winter storms in Texas, Oklahoma and Louisiana until June 15, 2021 to file taxes and make tax payments. The May 17 filing and payment extension relief does not affect this special consideration.
The following states are also offering relief to winter storm victims:
- Idaho is offering relief to the entire states of Texas and Oklahoma through June 14.
- Indiana is extending certain tax deadlines to residents of Texas, Louisiana and Oklahoma who were impacted by severe winter storms to June 15.
- Louisiana is granting automatic filing and payment extensions to eligible taxpayers in Louisiana and Texas to June 15.
- New Jersey taxpayers impacted by Texas storms have until June 15 to file their New Jersey tax returns and submit payments, including 2021 estimated payments. Affected taxpayers must write in black ink “Presidential Disaster Relief Area” at the top center of their New Jersey tax return and/or their payment.
- Oklahoma announced a payment deadline extension until June 15 for both 2020 taxes and 2021 estimated income taxes. Return due dates are not extended. Late penalties and interest for taxes owed will be waived up to $25,000.
- Texas extended its tax due date to June 15.
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When Are Estimated Taxes Due
The tax-filing deadline extension does not apply to those filing estimated taxes, according to the IRS.
Those who pay estimated taxes have a slightly different schedule from others. People who pay quarterly estimated taxes include workers who are self-employed, earn money from tips, or any similar entrepreneurial or independent contractor jobs. If your paycheck doesnt have taxes taken out before the money gets to you, then you should be paying estimated taxes quarterly.
Estimated taxes are due quarterly with Form 1040-ES, and there are two sets of dates. If youre self-employed or a farmer or fisherman:
- First quarter payments are due April 15
- Second quarter payments are due June 15
- Third quarter payments are due Sept. 15
- Fourth quarter payments are due Jan. 15
If youre an employee who earns tips, youll be paying monthly instead of quarterly:
Contribute To Your Health Savings Account
This medical account, available to individuals who have a high-deductible health plan, provides a tax-saving way to pay for out-of-pocket costs. You have until the May 17, 2021, tax deadline to contribute to an HSA for the 2020 tax year. The 2020 limits were $3,550 for an individual HSA owner and $7,100 for a family. For 2021, the individual coverage contribution limit is $3,600 and the family coverage limit is $7,200. If you’re 55 or older, you can put an extra $1,000 in your HSA.
» MORE: Learn more about the tax effects of HSAs and flexible savings accounts
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What Happens If I Miss The Tax Deadline
If you received an extension and fail to file your income taxes by midnight on Oct. 15, what happens next depends on your situation. If you are owed a refund, there is no penalty for filing late, though this may be different for your state taxes. But if you owe the IRS, penalties and interest start to accrue on any remaining unpaid tax due. There’s also a $330 failure-to-file penalty under the Taxpayer First Act of 2019.
In most states, taxpayers who are granted a federal extension to file automatically receive an equivalent extension to file their state income tax return.
An important note: If you are owed a refund or you filed for an extension through Oct. 15, you were supposed to pay your taxes by May 17. If you owe money, you would have been required to estimate the amount due and pay it with your Form 4868. If you did that, you should have automatically been granted an extension.
Another caveat: If you’re serving in the military — in a combat zone or a contingency operation in support of the armed forces — you may be granted additional time to file, according to the IRS.
Bottom line? It’s best to e-file or postmark your individual tax return as early as possible. CNET’s roundup of the best tax software for 2021 features an array of packages that can help you take care of business quickly and affordably.
See also
What To Do If You Expect A Refund
Even if you dont owe any money to the IRS, you should still make sure your return is filed by the deadline to receive your refund and any stimulus money youre owed as quickly as possible.
Still, prepare to be patient: The IRS continues to face processing delays due to its large backlog and implementation of last-minute tax changes. Earlier this year, the IRS issued a list of best practices and common errors to avoid, which you can use to ensure your return is processed and refund issued as quickly as possible.
After you file, you can check the status of your refund using the Wheres My Refund tool on the IRS website.
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Accountants Concerned About Decision Not To Extend The Deadline
Ball says hes concerned about the CRAs decision to stick with the April 30 deadline this year.
The U.S. announced in March it would extend its federal folding and payment deadline from April 15 to May 17. And in Canada, Revenue Quebec said it will not start charging interest or imposing penalties until May 31, 2021.
Weve been discussing with the federal government for several months now, Ball says. But so far, Ottawa isnt budging.
Extending filing deadlines this year would risk interrupting essential credit and benefit payments for millions of Canadians payments on which thousands of Canadians rely, the CRA told Global News in an emailed statement.
The agency also said it is monitoring the impact of the COVID-19 pandemic across the country and has expanded payment arrangement options.
Still, Ball says many professional tax-fillers are under tremendous strain this year. On one hand, tax pros are facing an onslaught of new, pandemic-related tax and benefits provisions. The federal wage and rent subsidy programs for businesses, for example, require monthly applications, which is resulting in extraordinary workloads for many accountants, according to Ball.
On the other hand, some of the small and medium-sized accounting firms are facing staff shortages due to sickness, personal issues and stress, he says.
We were really hoping that the government would make an announcement to give people more time.
What Happens If You Miss The Deadline
If you miss the tax filing deadline, the IRS recommends filing your late return as soon as possible to avoid a failure-to-file penalty. The IRS wont charge a failure-to-file penalty when a refund is due. However, there is a three-year statute of limitations on refunds. If you file more than three years after your deadline, then you wont get your money.
Individuals who miss the payment deadline may be subject to a failure-to-pay penalty along with interest charges on the amount due. An exception may be if youre experiencing hardship and file a special extension.
Try to file your taxes as early as possible to avoid missing the deadline. Start gathering your documents as soon as you receive them, and be sure to make an appointment if youre working with a tax professional. Even if the IRS extends the due date, it might be in your best interest to file early, especially if youre expecting a refund.
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May 17 New Deadline For Most Small Business Tax Returns
Tax returns, payments, and forms for all types of businesses for the 2020 tax year are due in 2021 and tax dates can shift by a day or two from year to year. Different types of business entities file tax returns in different ways.
The IRS announced an extension to May 17, 2021, of the deadline for filing individual income tax returns, including those who pay self-employment taxes. This extension does not affect estimated quarterly taxes, which are still due April 15, 2021, for non-employee income.
- The IRS has announced that it is extending the April 15, 2021, tax filing and payment deadlines for victims of February 2021 winter storms in Texas, Oklahoma, and Louisiana, beginning February 11, 2021, to June 15, 2021. This extension applies to the entire state of Texas and other states that include . The extension also applies to:
- 2020 business and personal tax returns due April 15
- 2020 IRA contributions due April 15
- 2021 Quarterly estimated income tax payments due April 15
- 2021 Quarterly payroll and excise tax returns normally due on April 30
- 2020 Tax-exempt organization returns normally due May 17
What To Do If You Owe Taxes
When you file your extension, youll need to include an estimate of your taxes owed on the form, which can help you determine the payment amount you should submit when filing. Use last years tax return, along with your W-2 and forms for other income sources to estimate.
The IRS offers a tax calculator to help you figure out your total tax obligation using your pay statements most recent tax return. To determine what you still owe, subtract any amount youve already paid toward taxes.
If you submit your estimated payment through IRS Direct Pay and indicate that the payment is for an extension, the IRS will automatically count your payment as an extension, even if you havent filed Form 4868.
If you dont have the money to pay what you owe in full right now, any amount that you are able to contribute can help reduce the penalties and interest youll be charged in the future.
If you are in a tough spot and dont know if youll owe because you havent had a chance to get your documents together, the best thing to do is to file an extension with both the IRS and your state and make an extension payment that way youll avoid penalties, says Ally-Jane Ayers, CFP, co-founder and financial planner at Brooklyn FI.
For further flexibility, take time to apply for a short-term payment plan or long-term installment agreement with the IRS to spread your balance out over time with a lower monthly payment.
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Where Can I Find Help With My Taxes
You can find helpful and affordable assistance by choosing a provider from CNET’s roundup of the best tax software for 2021. But the IRS does offer some free tax help, too. The Volunteer Income Tax Assistance program is designed to offer guidance to people who make less than $54,000 per year, have disabilities or have limited facility with English. And the Tax Counseling for the Elderly program specializes in tax issues that affect people who are 60 or older. Due to COVID-19, however, many VITA sites, and all TCE sites, have been closed. For now the IRS’ International Taxpayer Service Call Center remains available at 267-941-1000, Monday through Friday, 6 a.m. to 11 p.m. ET.
I Have Questions About My Taxes Can I Call The Irs
There are numerous ways to contact the IRS. The agency no longer offers live online chatting, but you can still submit questions through its online form. If you prefer to talk to a person, the IRS maintains a number of dedicated phone lines that are open Monday through Friday, from 7 a.m. to 7 p.m. . Individuals can call 800-829-1040 and businesses can call 800-829-4933. Note, however, that the IRS says “live phone assistance is extremely limited at this time.”
And there’s always the Interactive Tax Assistant, an automated online tool that provides answers to a number of tax law questions. It can determine if a type of income is taxable, if you’re eligible to claim certain credits and whether you can deduct expenses on your tax return. It also provides answers for general questions, such as determining your filing status, whether you can claim dependents or if you even have to file a tax return.
If you have a question for the IRS specifically related to stimulus checks and your taxes, the IRS recommends that you check IRS.gov and the Get My Payment application.
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When Is The Last Day To Pay My Taxes
If you owe taxes, the last day you have to pay what you owe is Wednesday, April 15, 2015. Even if you cant get your taxes completed on time, and you decide to file an extension, you still need to pay the amount you owe on the 15th in order not to incur late and penalty fees. If you dont know the exact amount you will owe, that isnt an excuse the IRS will accept. You still need to estimate what you will owe and pay that amount, making sure your estimate comes within 90% of what you owe to avoid penalties . For this reason, its better to overestimate than underestimate when calculating what you think you may owe.
How Do I Check The Status Of My Refund
The IRS website features a handy web-based tool that lets you check the status of your refund, and there’s also a mobile app, IRS2Go. You can usually access your refund status about 24 hours after e-filing or four weeks after mailing in a return. To check your status, you’ll need to provide your Social Security number or ITIN, filing status and the exact amount of your refund. If your status is “received,” the IRS has your return and is processing it. “Approved” means your refund is on its way.
Read more: What’s your 2020 tax return status? How to track it and your refund money with the IRS
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Software You Can Use On The Last Day To File Taxes
