July 15, 2020 is the due date for income tax returns and payments from 2019, as well as estimated tax payments for self-employed workers that were previously due on April 15 and June 15 of this year. The IRS confirmed this week that it would not be extending the deadline any further.
As more states are limiting recreational activities and re-closing bars and restaurants during the Fourth of July weekend to curb a recent surge in coronavirus infections, it's looking like the perfect time to finally check taxes off your to-do list.
Anyone can get a tax filing extension, but your bill is still due by July 15
If you can't get all your tax documents together to file by July 15, or you just don't have the time, you can file for an extension to postpone your deadline to October 15.
Keep in mind that the extension doesn't apply to your tax bill that's due on July 15, unless you work out a payment plan with the IRS.
If you can't afford to pay your balance in full, the IRS offers reasonable long- and short-term payment plans at much lower interest rates than most banks. You may even be able to settle the bill for less than you owe, called an offer in compromise , or request a deferment until you can make a payment.
Offers in compromise and requests for deferment require additional paperwork and must be approved by the IRS.
The IRS encourages e-filing your taxes
Expect to set aside some time to give it your undivided attention the IRS estimates the average person spends up to seven hours gathering tax documents and preparing their tax return on their own , without the help of a professional. If you're a business owner, expect to spend about 20 hours on your taxes.
The IRS encourages online filing and directs taxpayers with incomes under $69,000 to its free filing portal , which lists 10 qualified tax preparers that offer free federal filing services (though there's typically an additional charge for state filing).
For people with incomes north of $69,000, you can still find free filing optionsif you have straightforward income. A more complex situation like self-employment or complicated investments means you'll likely have to pay for online tax software , which can range from $25 to $120 or more for federal and state filing. For an additional charge, you might be able to connect with a tax professional to ask questions or review your return before submitting.
If your tax return is late and you owe money, expect a penalty
Over the last three months interest and penalties on federal tax payments were waived since the due dates were moved, but they'll resume the day after the tax deadline.
Every 30 days, you'll be charged 5% of any unpaid tax you're required to report on your return. Even if you file within a few weeks of the deadline, the full month penalty still applies.
When your return is filed more than 60 days after the due date, it's subject to a minimum penalty equal to the lesser of 100% of the tax required to be paid on your return or $435, according to current IRS rules . There will also be interest accruing on your balance.
You can pay your bill when you file your return or schedule a payment ahead of time on the IRS website. The IRS recommends e-filing through its free file program if you qualify. If your income is too high, you might still be able to file for free through tax services like H&R Block , TurboTax , or Credit Karma Tax .
You have to file to get your tax refund, but it might come with interest
If you're expecting a tax refund and don't file your federal income tax return on time, there's no late charge but you won't get it until you file.
Taxpayers with refund issue dates when the agency sends out your refund by direct deposit or mail between July 1 and September 30 earn an annual interest rate of 3%, the IRS explained in a statement . All interest is compounded daily, and accrues between April 15 the former tax deadline and the issue date of the refund. It could be sent as a separate payment.
Despite processing and refund delays caused by the pandemic, the IRS still recommends e-filing your return and choosing direct deposit for your refund. It's the quickest and safest way to get your money.
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