While filing your tax returns before the deadline is the right thing to do, even if you miss the deadline, you can request a tax extension. The Internal Revenue Service (IRS) doesn’t need a reason for your delay and will extend the date by six months.
Beware the penalty
But if you have got an extension, the deadline is October 15 to submit your tax return. If you miss any deadline of an extension, you will be charged a failure-to-file penalty. For every month or half month that you don’t pay your taxes, you will incur a penalty of 5% on your unpaid tax bill that can go up to 25%.
Watch out for the interest
Moreover, the interest has been adding up since the original filing deadline. If you miss this deadline as well, the interest will increase even more. Even if your tax refunds are delayed by the IRS, they expect you to file returns by October 15. And you will be refunded based on this return. The more you delay, the longer you have to wait for your refund.
Seek help from tax professionals
The year 2020 was unprecedented for taxes with many changes in law and the impact of the Covid-19 pandemic on millions of people. It’s advisable to clear any doubts you might have regarding the changes anytime soon. One of the main reasons people miss the deadline is that they are unable to complete the returns because of the current situation. It is advisable to reach out to a tax professional before it’s too late.
Keeping what happened in 2020 in mind, you can also start preparing for 2022 to avoid confusion later. You can also make contributions before the end of this year to lower the 2021 tax burden and receive higher refunds in 2022.
You can start by contributing more than required to the current year’s retirement plan or health savings accounts. If you have any loss on your investments, you can consider making charitable contributions.
Exception: The areas declared as disaster areas by the federal government because of Hurricane Ida need not worry about this deadline.