ax season is already upon us. The IRS will begin accepting 2020 income tax returns on Feb. 12, and the deadline to file will revert to the traditional date, April 15. (Last year, the IRS extended the deadline to July 15 due to the coronavirus pandemic.) For many, preparing a tax return this year will be more complicated than usual, given the host of new and potentially thorny issues that arose in 2020 including unemployment insurance claims, stimulus check income and pandemic-driven changes in residence.
If that wasn’t enough, the political environment remains highly dynamic, with an incoming US administration that’s likely to have a dramatically different orientation to tax matters than the previous one. And scammers are sure to take advantage of the situation, trotting out classic tax scams in addition to new ones cooked up specifically for this strange time. As such, we’ve assembled answers to some of the most common tax questions to help you navigate your taxes this year. Read on for the details.
When is my 2020 tax return due in 2021?
Though the IRS extended last year’s deadline from April 15 to July 15, your 2020 tax return is due on April 15, 2021. Though the agency won’t begin accepting tax returns until Feb. 12, you can start preparing your taxes now with one of the best tax software companies. And if you request an extension, the tax deadline will come on Oct. 15, 2021.
Those dates could change again this year. The IRS sticking with an April deadline likely depends on the progression of new COVID-19 variants and the rate of vaccination, according to Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center.
“Another shutdown of facilities, forced by the pandemic, could lead to a delay in the filing deadline and a delay in refunds,” Holzblatt said. “For all our sakes, let’s bet on good health — and people filing early and electronically.”
What happens if I miss the tax deadline?
If you fail to file your income taxes by midnight on April 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 will start to accrue on any remaining unpaid tax due in April. There’s also a $330 failure-to-file penalty under the Taxpayer First Act of 2019.
It’s best to file on time, even if you owe money that you can’t pay right now — in most cases, late filing penalties are higher than late tax payment penalties. If you can’t file on time, you can file for an extension, which automatically pushes back the tax filing deadline to Oct. 15 and protects you from penalties. 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 if you file for an extension through Oct. 15, you still have to pay your taxes by April 15. If you owe money, you’re required to estimate the amount due and pay it with your Form 4868. If you do that, you’ll automatically be granted an extension.
Another caveat: If you are in a federally declared disaster or 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, and certainly by the April 15 deadline. 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…Read more>>