Most Americans only have a few days left to file taxes for 2020. Here’s what to know
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If you haven’t filed your 2020 tax return, the clock is ticking.
The deadline for returns in 2020 is Monday 17th May. In March, the IRS postponed the return date due to the coronavirus pandemic, giving most Americans an extra month to file.
Even with the extra time, many Americans hesitate to prepare and submit, an often confusing task made even more complicated by the health crisis and legislation passed midway through this year’s filing season.
“Filing your taxes is always important, it’s your responsibility,” said Allison Koester, former CPA and associate professor at Georgetown University’s McDonough School of Business.
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One of the top reasons for filing a tax return is to request a refund that you owe from the IRS. As of April 30, the IRS has received more than 121 million individual tax returns and processed more than 110 million. To date, the agency has sent more than 81 million tax refunds to Americans with an average check of $ 2,865.
Often the greatest coincidence families receive year-round, this refund can be helpful for paying off debts, increasing savings, and more. This year in particular, following the effects of the coronavirus pandemic, Americans should be demanding any money they owe.
According to Rebecca Thompson, director of the Taxpayer Opportunity Network at Prosperity Now, a nonprofit, a refund isn’t free money. It’s money you overpaid to the US government, basically an interest-free loan. You have a right to get it back and you should.
While May 17th is the deadline for this year’s taxes, this is also the date by which you must claim refunds from 2017 onwards. Taxpayers have three years to apply for refunds with the IRS. In April, the IRS announced that they had unclaimed refunds of $ 1.3 billion as of 2017.
“Unless [file] then the money is lost and it becomes a donation to the treasury, “Thompson said.
Claim these credits and more
This year there are other reasons that submitting information to the IRS is important, even for those who traditionally do not file filing.
For one, filing a return and claiming the refund discount credit is the only way you can get any economic impact payment owed, or get a “top-up” amount if your circumstances change – for example, if you had a baby in 2020 was for one Stimulus test justified.
The American bailout plan also made some tax changes. For the millions of Americans who lost their jobs due to Covid, the first $ 10,200 in unemployment benefits is now exempt from federal taxes for those on incomes below $ 150,000. The exemption is $ 20,400 for a couple with the same income.
Parents are also required to file a 2020 tax return to ensure the IRS has accurate information to apply for the extended tax credit for children whose monthly payments are scheduled to start in July.
Penalties and Extensions
If you don’t file, you could miss out on the refund money and potentially receive penalties and interest if you owe the IRS.
“Anyone who thinks they owe something is very important to ensure that they receive that tax return or file an extension that is accepted by the IRS and that they do so by the filing deadline,” Thompson said. “If not, they will face penalties for failing to submit and not pay.”
Of course, even if you file an extension, you face fines if you fail to pay your taxes, she said. The payment deadline ends on May 17th, regardless of whether you submit an extension or not.
Still, filing an extension can be helpful for some, and the penalty for late paying your debt is generally minor.
“There’s no shame in filing an extension,” said Koester. To obtain an extension, you must file Form 4868 with the IRS. You will then have until October 15th to archive.
Just do it
In a way, filing taxes has never been easier as there are several online programs to help you prepare and file your tax returns.
“You still have time to collect your documents and records before the deadline,” said Lisa Greene-Lewis, CPA and Tax Specialist at TurboTax.
There’s no shame in filing an extension
Associate Professor at the McDonough School of Business at Georgetown University