Filing Late for the 2020 Tax Season
Under normal condition, the federal tax deadline is on the April 25, 2020. When the Tax Day falls on weekend, you can file up the tax until the following monday. However, some circumstance around this 2020 year can affect the deadline of this tax season. Because of the coronavirus pandemic accross the nation, the Fed extends tax filing deadline today. This situation may give impacts to you. It is important to understand this situation, so you can get benefits from this situation. You need to know where you live and also whether or not you owe money to the government.
When is the deadline for 2020 filing?
All people can file the tax returns and also tax payments for the 2019 tax year without getting penalties until July 15, 2020. All penalties and interest will start to accrue after this deadline date. This extension only applies to the federal income tax. However, the deadline for filing and payment for state tax may be different among many states. You need to check the local requirements, so you can find out the right deadline for any of your taxes. You need to note your tax due dates and also files accordingly.
Why should you file on time?
If you don't owe any money to the government and you will receive a tax refund, you will never have to pay any penalties for the late tax return. However, there are some consequences that you need to have, especially when you don't file on time. These consequences may be bad for your bank account and also your financial well-being.
Filing your tax lately doesn't mean that your refund can be in your hands automatically. You have about three years to claim your tax refund from the time your tax is due. The same rule also applies to claiming the tax credits, for example Earned Income Credit. This is a credit that is beneficial for households with low or moderate income.
The information from the federal tax return can be used in any financial situations. You can use your tax return information when you apply for the Federal Student aid, home loan, or a business loan. It is recommended for you to file any taxes every year and also n time, so you can be ready for anything in your life.
If you are self-employed, you can get impacted by not filing the tax on time. Your self-employed income will not be reported to the social security administration. Then, you are not going to receive credits on your social security retirement and also disability benefits. You can also get disadvantage when you haven't paid enough in your tax during the year. When you have a tax liability, late filing can result in harsh late fees.
What should you do if you cannot pay tax?
If you cannot pay the entire balance that you owe, you can always pay what you are able to to so. By doing that, you can avoid accruing the interest from your tax. The IRS also recommends you to take out a loan and paying by credit or debit card. Doing so can be more affordable than owing the money to the government. The IRS has three cost-effective options that are suitable for all people. You can follow any of these three options for you who cannot pay your tax when it is due.
- Payment plan
This is the first option that you can have. In this option, you can come to an agreement with the IRS for paying your balance in full. You can also participate in the short term paying plan in 120 days or less and also the long term plan (which is more than 120 days). You can file a form of 9465, so you can request a monthly installmetn plan when you cannot make the full amount of tax on the tax return. You can manage your plan based on your budget. It is important for you to take a look at the whole budget before you decide to choose the best payment plan for you.
- Offer-in compromise
This option can be considered by the IRS for all filers who cannot pay the taax. The IRS will consider your ability to pay by looking at your income, expenses, and also asset equity. They wil determine if they can pursue this option for settling down your debt to the government. There are some procedures that you need to do when you choose this option.
- Temporary delay for the collection process
This option is based on your financial situation. The IRS will determine if you cannot afford to pay your current debt. When you have this option, you are going to get additional interests and penalties on your account.
Do you have any excuses for filing late?
When you need to file late, you need to contact the IRS immediately. They will take into consideration some causes to reduce penalties. There are some common reasons that can be considered by the IRS to eliminate your interests or late fees, for example natural disaster, fire, casualty, death, serious illness, burglary, and also inability to obtain any records. If you are active on your duty in the military and you are in the combat zone, The IRS can give you opportunities to file late. It can be an acceptable excuse for you to file your tax.
If the IRS can accept your excuse as a valid reason, they will remove your penalties for failing to pay on time, file a tax return, and also deposit certain taxes. You need to understand that lack of funds cannot be considered as a good rason to skip your tax payment. Missing tax document is also unacceptable to be used as an excuse for filing late. It is recommended for you to contact the IRS when you are unable to file your tax on time. They will determine if you are eligible to file late without paying the late fees or other compensation costs.