Filed an Income Tax Extension? What’s Next?

The coronavirus outbreak has been extremely hard on most people. With the U.S. unemployment rate skyrocketing and millions of households struggling to eat and pay their bills, the impact of this deadly disease and the economic fallout has been devastatingly sad.

Going through a financial crisis right now due to COVID-19? Did you know that you can ask for an extension on your federal taxes? You will need to submit a request to the IRS and receive confirmation that it’s been granted. Currently, you can’t check your request’s status online, but you can call the IRS customer service number to determine if it was received and approved.

Please note that if you are given an extension, you usually have until October 15 to file your tax return, but this deadline might change due to COVID-19. Depending on what state you live in, your state income tax deadline may also be extended. However, states like New York require you to fill out a separate extension request if you need extra time to pay your state income taxes.

Tax extensions are often rejected due to common mistakes: misspelled words, switched numbers, and out-of-date information like old addresses or last names not listed on IRS records. You will receive an email or letter from the IRS about your rejected request. In most of these cases, they will give you five days to fix these issues and submit your request again.

Looking to pay any late taxes? Even if you can’t afford to pay them all in full, just pay as much as you can. The IRS hits you with penalties and interest based on how much you owe and for how long. Typically, late payment penalties are calculated at 0.5% of the unpaid tax balance per month. The maximum you can be charged with is 25% of the unpaid tax.

Here’s an example that shows you what the IRS means:

• Penalty per month → $2,000 x 0.5% = $10

• Total possible late payment → $2,000 x 25% = $500

For the people who are filing their tax returns on time, the due date for them is usually April 15. However, due to the COVID-19 pandemic, the tax deadline may be extended, giving U.S. residents more time to gather their tax returns and documents.

Still confused about your income tax extension? When you’re stuck in a situation like this, working with a dependable tax professional is your best option. They are individuals who are trained to get you out of situations such as this one. Tax professionals will gladly answer all of your questions and provide you with useful advice to prevent this from ever happening again.

References:

“What to Do After You’ve Filed an Income Tax Extension.” TurboTax.