It's the Final Countdown!
Earlier this week the Treasury Department announced that the tax-filing deadline for 2019 will not be extended beyond July 15, 2020. If you have questions about what this means for you, keep reading!
What if I won’t be ready to file in less than two weeks?
You will still have the option of filing for an extension that would allow you to file on, or before, October 15. However, “(t)he IRS urges people who owe taxes, even if they have a filing extension, to carefully review their situation and pay what they can by July 15 to avoid penalties and interest”.
COVID-19 has hit us hard financially, what happens if we can’t pay what we owe by July 15th?
So, there’s good news and bad news here. The good news is that there are options you may qualify for such as an installment agreement, a request to temporarily delay collection, or submitting an offer in compromise. The bad news is that with, or without, a filing extension, the payment deadline remains July 15th. That means that while you may not have to file your return until October, you will be accumulating interest, penalties, and possibly additional fees, on any unpaid taxes beginning July 15. While an installment agreement is in effect the IRS reduces, but does not eliminate) failure to pay tax penalties. Interest on unpaid taxes is currently at 3%, but this rate fluctuates. Based on the current interest rate, without an installment agreement you could be charged up to 9% before any additional fees. Though you are still looking at the possibility of paying up to 6% (not including possible fees) with an installment plan.
What about my state taxes?
While states are often in sync with the federal deadlines this is not always the case so make sure you, or your tax preparer, are keeping up to date with the filing and payment guidelines for your state.
How do I figure out which option is best for me?
If you are able, I recommend paying the full amount you owe on, or before, July 15th to avoid accruing interest, penalties, and fees. If, like many Americans impacted by COVID-19 and other financial hardships, this is not realistic, you will want to retain an Enrolled Agent who will work directly with the IRS on your behalf to get you the best possible outcome.
Many are ashamed and afraid when they realize they can’t pay their taxes on time; you don’t have to be. You are not alone, and help is available. Every year our team at Vector Tax & Accounting resolves tax issues for our clients and we are always dedicated to securing the best possible outcome for each client. We work locally with clients in the Greater Hartford, CT area, and virtually with clients from across the country. Don’t let interest, fees, and penalties add to your unpaid taxes because you’re overwhelmed. Request an appointment with us as soon as possible so we can start working with the IRS on your behalf and you can start enjoying your summer.
(Sources: IRS.gov, memegenerator.net)