Pay attention to the calendar and mark the date! This Friday, October 15, not only millions of households receive the Child Tax Credit, it is also a key date for certain taxpayers, especially those who have not claimed certain credits and refunds.
The IRS recently announced that it is on track to complete the processing of millions of tax year 2020 returns. The tax agency is likely to reach the goal by the end of 2021, just in time for the 2022 tax filing season to begin. .
As of October 2, the IRS had 6.8 million raw individual tax returns for tax year 2020, up from 7.6 million the previous week. The IRS has reduced the number of returns that require special processing from an all-time high of 9.8 million on May 1, 2021 to the current level of 224,000 individual returns. In some cases, the process can take 90-120 days.
Also as of October 2, the IRS had 2.8 million unprocessed amended individual tax returns, or Forms 1040-X. The current processing time for these is 20 weeks, compared to the usual 16 weeks.
But the bad news is not the delay but that millions of taxpayers are still waiting for refunds as others are receiving notices of ‘miscalculation’ and adjustment of amounts, which, for many, means a debt with the IRS. The tax agency expects to receive another 4 million returns for fiscal year 2020 before the tax filing extension deadline on October 15.
THIS FRIDAY TIME IS RUNNING OUT
Although the deadline for filing taxes was extended to May 17 of this year, millions of taxpayers requested another extension to collect their records and get professional advice, or even to avoid possible errors. But that final term of fiscal extension is approaching now. And if you miss the October 15 filing date, you’ll have to pay late fees and high interest.
Most importantly, if you have not yet filed your 2020 tax return, you could lose money from the IRS, such as a tax refund, stimulus checks, or Child Tax Credit payments. If you wait too long to file and claim a refund, the IRS says you could risk losing it entirely.
Remember, an extension does not postpone paying the taxes you owe, it only gives you additional time to file your return. The IRS still offers several electronic filing options, including free filing for people whose income does not exceed $ 72,000.
The IRS granted a tax filing extension to anyone who filed Form 4868 before the May 17 deadline, but the taxpayer is required to pay all or part of their estimated income tax owed, either using Direct Pay, the Electronic Federal Tax Payment System, or a debit or credit card.
Certain taxpayers are automatically granted more time to file their return. This includes military personnel serving in a combat zone or people in federally declared disaster areas. That is the case in New York and New Jersey after the devastation caused by the remnants of Hurricane Ida.
DAMNIFIED FROM HURRICANE IDA HAVE UNTIL JANUARY 3, BUT THERE ARE EXCEPTIONS
Hurricane Ida victims in parts of New York and New Jersey have until January 3, 2022 to file individual and business tax returns and make tax payments comparable to the relief provided to Ida victims in Louisiana.
The IRS offers the extension to any area designated by the Federal Emergency Management Agency (FEMA). In New York, this currently includes the Bronx, Brooklyn, Manhattan, Queens, Staten Island, and Westchester counties, and in New Jersey, it includes Bergen, Gloucester, Hunterdon, Middlesex, Passaic, and Somerset counties. Taxpayers from Ida affected localities subsequently designated by FEMA in other parts of these states will automatically receive the same relief.
This means that people who had a valid extension to file their 2020 return that expires on October 15, 2021, will now have until January 3, 2022 to file it. However, the IRS noted that because tax payments related to these 2020 returns are due on May 17, 2021, those payments do not qualify for this relief.
The due date of January 3, 2022 also applies to quarterly estimated income tax payments that are due on September 15, 2021, and quarterly payroll and excise tax returns that are normally due on November 1 2021. It also applies to tax-exempt organizations operating on a calendar per year, which had a valid extension that would expire on November 15, 2021. Companies with an original or extended expiration date also have the additional time, including, but not limited to, calendar year partnerships and S corporations whose 2020 extensions expire in Corporations on September 15, 2021 and calendar year whose 2020 extensions expire on October 15, 2021.
HOW DO I FILE MY 2020 TAX RETURN IF I HAVE UNTIL FRIDAY TO DO IT?
The IRS says that taxpayers can file and schedule their federal tax payments online, over the phone, or with the IRS2Go mobile app.
If you need to find a tax software service to use and make $ 72,000 or less, you can easily find a free filing service IRS approved. You will need to collect the following information:
- Income statements (W2 or 1099)
- Any adjustments to your income
- Current marital status (single, married, filing jointly)
- Information about your dependents.
If you earn more than $ 72,000, you can use the form Free File Fillable.
If you haven’t made a tax payment yet, the IRS prefers that payments be made electronically and offers a variety of ways to do so, including IRS Direct Payment, which is directly linked to a checking or savings account. Another option is by credit card through the IRS2Go mobile app, or by Electronic Federal Tax Payment System.
WHY DO I OWE MONEY TO THE IRS IF I HAD AN EXTENSION?
Extending the filing deadline to October 15 does not delay the obligation to pay the taxes that you may owe. According to the IRS, you had to calculate and pay at least 90% of your tax liability by May 17 to avoid late fees. Otherwise, you will have accrued interest on what you owe, which you will eventually have to pay, plus possible penalties, in addition to your income taxes.
The late payment penalty is typically 0.5% per month of outstanding tax not paid before the filing deadline, with a maximum of 25%. The IRS can also issue a late filing penalty of 5% of the amount owed for each month or partial month that your tax return is late. If your return is filed more than 60 days after the due date, the minimum late filing penalty is $ 435 or 100% of the unpaid tax (whichever is less).
For individual taxpayers, penalties and interest will stop accruing only when your balance has been paid in full. To learn more about penalties or to work out a payment plan with the IRS, open here.
WHY SHOULD I DECLARE TAXES TO CLAIM CHILD CREDIT AND ENCOURAGEMENT CHECKS?
If the IRS owes you money from the first two stimulus checks, you can claim the missing payments through a recovery refund credit on your 2020 tax form. This is true even if you are not normally required to file taxes. Therefore, the longer you wait to apply, the longer it will take to receive the missing stimulus payment.
The IRS says it will automatically assess whether you qualify for the third stimulus check when your 2020 return is processed. If the IRS calculated the amount of your third stimulus payment using your 2019 tax return, you may qualify to receive more money as a called an “additional payment” once the IRS receives the 2020 taxes and recalculates the total. However, until you file a 2020 tax return, the IRS will not have your new income or dependent information on file.
The IRS plans to issue stimulus payments and additional payments to taxpayers until the end of 2021.
The IRS will also use your 2020 tax return to determine the amount of money for which you qualify for the Child Tax Credit.
Monthly advance payments began issuing on July 15 and will continue through December 15. If you’ve waited much later to file your 2020 tax return, the IRS will have used your 2019 tax return to calculate your initial payments.
If you have had a change in income or have a new dependent since the previous return was processed, you could receive less money than you qualify for this year. Here you will find everything you need to know about him IRS Update Portal, which allows you to cancel the registration of advance monthly payments and update your household information.
If you do not file your 2019 or 2020 tax return, and do not plan to do so, you could still claim the child credit, but you would have to register in the non-contributor portal from the IRS before October 15.
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