Income tax filing has been a topsy turvy mess in the Year of COVID-19. But now that things seem to be settling into place, the Internal Revenue Service (IRS) is reminding taxpayers that October 15 is the deadline for most people who requested tax filing extensions.
We say “most” because some taxpayers may have more time. They include:
Members of the U.S. military and others who are serving in a combat zone. Typically, they have 180 days after they leave the combat zone to file returns and pay any taxes due.
Taxpayers in federally declared disaster areas who already had valid extensions. For details, see the disaster relief page on IRS.gov. Examples would be those affected by California wildfires or victims of Hurricanes Dorian, Michael, or Florence..
Things to remember
The IRS reminds taxpayers that while the deadline looms near, there are things that they should take into account to avoid problems down the line. Those include:
Pay ASAP to reduce penalties and interest. Like in a normal tax season, the IRS allows the same conveniences for this extension. Electronic filing options, including IRS Free File, are available to everyone. If a taxpayer uses a tax professional, the IRS reminds them to make sure the preparer uses electronic options to support social distancing and speed the processing of tax returns, refunds, and payments.
Choose direct deposit for refunds. “The safest and fastest way for taxpayers to get their refund is to have it electronically deposited into their bank or other financial account,” the IRS said. “Taxpayers can use direct deposit to deposit their refund into one, two or even three accounts. Direct deposit is much faster than waiting for a paper check to arrive in the mail.”
Track your refund. Once a tax return has been filed, the IRS prefers for taxpayers to use the agency’s Where's My Refund? tool on IRS.gov or download the IRS2Go mobile app to track the status of a refund. Contacting the IRS directly may take more time.
Pay federal taxes electronically. Another neat nuance for modern day taxpayers is the ability to make their federal tax payments online, by phone, or even with their smartphone and the IRS2Go app. However, the IRS says there are a few things that taxpayers who are paying federal taxes electronically should remember:
Electronic payment options are the absolute best way to make a tax payment.
Taxpayers can pay when they file electronically using online tax software. If using a tax preparer, taxpayers should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
IRS Direct Pay allows taxpayers to pay online directly from their checking or savings account at no cost, and to schedule payments up to a year in advance.
Credit cards, debit cards, or digital wallet options through a payment processor are all accepted and no fees go to the IRS.
One neat advantage ConsumerAffairs sees for taxpayers is the ability to enroll in the Electronic Federal Tax Payment System (EFTPS), which gives people a choice of paying online or by phone by using the EFTPS Voice Response System.
If anyone needs to check on the specifics of what they owe, review payment history, access historical tax records, etc., they can go to IRS.gov/account to securely access all of that information.
Can't pay the full amount?
The IRS knows full well that the pandemic has put many taxpayers in a difficult financial position. It’s reminding those who are in that situation that there are a variety of payment options available on IRS.gov/payments. Some caveats consumers should know include the following:
Despite the fact that interest and late-payment penalties will accrue on any unpaid taxes after the original July 15 due date, the failure to pay tax penalty rate is cut in half while an installment agreement is in effect.
The usual penalty rate of 0.5 percent per month is reduced to 0.25 percent per month. For the calendar quarter beginning Oct. 1, 2020, the interest rate for underpayment has been set at 3 percent.
Non-Filers can still get an Economic Impact Payment
Most people -- 160 million to be precise -- have already received their Economic Impact Payments (aka stimulus check). The IRS says that those who haven’t and have little to no income can still get this payment.
“People can qualify for a payment, even if they don't work or have no earned income. But low- and moderate-income workers and working families eligible to receive special tax benefits, such as the Earned Income Tax Credit or Child Tax Credit, cannot use this tool,” the agency said. “They will need to file a regular return as soon as possible. The IRS will use their tax return information to determine and issue any EIP for which they are eligible.”
In situations where incomes are typically below $24,400 for married couples, and $12,200 for singles, they must enter their information by Nov. 21 to get a payment this year. As far as ConsumerAffairs could tell, the only way to apply for a payment is the Non-Filers tool on IRS.gov.