CPA Daniel Geltrude explains when you need to apply immediately and when you should take advantage of the later deadline of May 17th.
Americans must declare their 2020 today tax return – or risk for a financial penalty.
This year, the IRS has extended the traditional tax filing deadline from April 15 to May 17, giving most taxpayers an extra month to prepare returns in the midst of the crowd. pandemicPolicy changes related to the US $ 1.9 trillion rescue plan.
As of May 7, the IRS has processed about 116 million applications. By comparison, he made about 126.7 million returns. The agency has issued approximately 84 million returns so far, which is 3.2% less than at this point in 2020
If you haven’t signed up yet, here’s what you need to know:
Contents
Taxpayers can request an extension until October 15
If you haven’t filed a tax yet, don’t worry – there is still time to request an extension until October 15. If you are a natural person, you can apply for an extension online by filling out form 4868 using the tax administration. “Free FileThe form requires an estimate of your tax liability.
IRS EXPIRES IRA, HEALTH SAVINGS ACCOUNT CONTRIBUTION DEADLINE UNTIL MAY 17
But beware, if you owe taxes to the federal government, payments are still due on May 17th. The IRS offers some payment plans individuals who are unable to pay taxes in full. The more you pay by May 17, the less you will pay interest and penalties.
If possible, you should file your tax online
Electronic tax filing is the fastest way to get your money back, he says IRS, especially as the agency breaks through the paper backlog created last year during the coronavirus pandemic.
The agency says it issues about nine out of 10 refunds in less than 21 days. On the same subject : SIPC Insurance: What It Covers And How It Protects Investors. In 2018, about 90% of taxpayers filed a return online.
There is still time to contribute to your IRA
The deadline for Americans to contribute to their IRA by 2020 is May 17. The maximum annual contribution for traditional and Roth IRAs for most Americans is $ 6,000. To see also : This Overlooked Roth IRA Benefit Could Help Your Kids Retire Rich. If you are over 50, you can add an additional $ 1,000.
Traditional IRA contributions can be tax deductible – withdrawals are usually taxed – although there are several complicating factors, including income limits and whether you or your spouse are covered by a workplace retirement plan.
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
For example, your deduction may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels. But your deduction is allowed in full if according to the job you are not covered by the pension plan IRS.
Your refund may be delayed
The IRS holds more than 29 million tax returns for manual processing, delaying returns for many low-income Americans, according to its internal oversight body. This may interest you : The Secret to Crushing Your Roth IRA Retirement Savings Goals | Smart Change: Personal Finance.
“As might be expected, IRS employees are thin working through the manual processing of these returns,” national taxpayer attorney Erin Collins wrote recently. blog mail. “So, if a taxpayer’s application is withdrawn for manual processing, there will be a delay.”
At least 8 million returns have been placed in “uncertainty” until an IRS employee can review them to ensure taxpayers receive the fully promised money from the incentive check. IRS officials are also calculating earned income tax and child tax – two tax credits for lower-income Americans, which have been expanded with President Biden’s $ 1.9 trillion coronavirus aid package.
In addition, 5.3 million paper applications are awaiting manual processing in 2019 or 2020, while 4.7 million applications have processing errors or fraud identification problems that require a taxpayer response. The tax administration retained 11 million business refunds for manual processing.
START FOX BUSINESS BY CLICKING HERE
“From a taxpayer’s perspective, their return seems to have fallen into a black hole: they don’t know what’s going on, when they’re going to get a refund, why it’s being delayed, or how to get answers or help,” Collins wrote.
In addition to the large number of applications for 2020 that require manual processing, the Tax Administration is struggling with the massive backlog of processed tax returns for paper for 2019 and the Herculean task of delivering millions of incentive checks.
Collins estimated that only 1 in every 50 calls to the IRS Customer Service was answered.
