If you’re only now beginning to consider your taxes this weekend, you’ve officially waited until the last minute. This Monday, April 18, is the deadline to file a return for 2021—also known as Tax Day.
That is the unfortunate news. The good news is that all hope is not lost if you’re one of the estimated 15 million taxpayers who aren’t quite ready to fold their accordion folders and call it quits for the year. Here are a few points to keep in mind.
DO I NEED TO SUBMIT AN EXTENSION APPLICATION BY MONDAY?
If you haven’t filed yet, the short answer is yes. There are, however, a few exceptions. The Internal Revenue Service (IRS) has already granted an automatic extension to taxpayers who live in disaster-affected areas of Arkansas, Colorado, Kentucky, and Tennessee. Residents of those areas are not required to file until May 16, and they are also not required to make tax payments until then. Residents of certain areas of Puerto Rico have an additional month—until June 16. Additional details are available on the IRS website’s dedicated “around the country” page.
PERFECT, I WILL OBTAIN AN EXTENSION. HOW AM I TO DO THAT?
The IRS makes this relatively simple. It maintains a list of partner businesses from which you can request an extension via its Free File programme. You can also request an extension if you already use a tax preparation service, such as TurboTax. It takes only a few minutes.
PERFECT, NOW I AM NOT RESPONSIBLE FOR PAYING TAXES UNTIL OCTOBER?
Wrong. If you owe taxes this year, you must still pay by Monday to avoid a penalty. The IRS recommends that you estimate your tax liability and then make a payment through your tax account.
LAST YEAR, I NEVER RECEIVED A STIMULUS CHECK. CAN I MAKE A CLAIM FOR THAT?
Perhaps, but you must ensure that you are truly qualified to receive one. To do so, simply log into your online tax account and navigate to the “payments” section. This section will detail any payments made by the IRS to you, including stimulus checks. If you see a check there but never received it—or received only a portion of it—you can claim it on your tax return as a Recovery Rebate Credit. Separately, the IRS should have notified you of your eligibility via letter.
However, and this is critical, you must ensure that you calculate the correct amount. If you make a mistake, the IRS will have to adjust your return, which may cause a delay in receiving your refund. Take it from the millions of taxpayers awaiting processing of refunds from 2021 and 2020. You do not want to become a victim of Manual Review Hell.
The IRS recognises that the entire process of issuing stimulus checks and rebate credits is far more complicated than it needs to be, and thus recently updated its FAQ page on the subject. It’s a must-read if you intend to claim the credit.
THIS IS ALL AN EXCESS. CAN I JUST FORGET TO FILE MY TAXES?
You’re not alone if you’re feeling that way this year, particularly in light of the aforementioned processing backlogs that have delayed so many refunds. However, if you throw in the towel and quit, you open yourself up to a world of headaches and heartbreak in the form of penalties and interest, including a failure-to-file penalty. According to the IRS, you will not be assessed a failure-to-file penalty if you are due a refund; however, if you wait too long, you risk permanently losing that refund. The bottom line is that it is simply preferable to file and get it over with.
Having said that, not everyone, including those earning less than the income threshold, is required to file a tax return each year. The IRS has a convenient tool to assist you in determining whether you are one of them. It is located here.